Changing Europe

UK: post-Brexit-heading for GDP growth close to zero

The UK referendum delivered a victory for the Leave camp, but by a relatively small margin In our view, this backdrop suggests that political uncertainty is likely to last for several quarters and makes it difficult to predict even the rough structure of the potential new relationship between the UK and the EU. We believe that it means that the UK may take a very long time (perhaps even years) to actually trigger the (in)famous Article 50 of the EU treaty, which is necessary to actually begin the formal process of exiting the Union. We a slowdown in the UK economy from 2% yoy in 1Q16 to 0.4% yoy by 4Q16E on the back of slower consumption and investment, and see growth of around 0.5%.