Hermes chief economist: Brexit uncertainty could erode UK's 'safe-haven status'

Stance remains Brexit should be avoided

Neil Williams, group chief economist at Hermes Investment Management, discusses the impact of a possible Brexit on the UK economy, and what can be learnt from Greenland's soft exit from the currency bloc.

The UK referendum on EU membership is the big 'known unknown' for UK assets. It could be called for as early as June or as late as October 2016, with disincentives to carry it over to 2017. Our base case remains Brexit is avoided, averting a destabilising hit to most UK assets. Logic suggests the unlikelihood of the UK wanting to risk weaker ties with its main trading partner (46% of export value, 53% of imports), FDI forgone, and a diluted relationship with the US. But, the uncertainty could soon erode the UK's relative safe-haven status. Should Brexit go ahead (risk case), the mark-...