First The Telegraph, then The Sun, and today The Spectator all came out on the "Leave" side of the Brexit debate. However, perhaps even more shocking to the establishment is the CIO of a major bank's asset management arm dismissing the apparent carnage that Cameron, Obama, and Osborne have declared imminent, warning that, "many articles on the Brexit vote overstate its risks and consequences." As JPM's Michael Cembalest adds, the reality is "hardly the stuff that economic calamity is made of." As The Spectator concludes, "the history of the last two centuries can be summed up in two words: democracy matters."
As JPMorgan Asset Management CIO Michael Cembalest explains...
My sense is that many articles on the Brexit vote overstate its risks and consequences for the UK, and/or overstate the vote’s impact on political movements and economic malaise in the Eurozone that predate it by months and years. Here are some thoughts on issues I have seen raised over the last few weeks.
“UK growth will suffer a huge hit”. Of all the analyses I’ve read about a possible Brexit scenario, I found Open Europe’s report to be the most clear-headed and balanced. Their realistic case estimates the cumulative impact of Brexit on UK GDP at just -0.8% to 0.6% by the year 2030; hardly the stuff that economic calamity is made of.
“UK-EU trade will collapse”. Not necessarily. Norway, Iceland and Switzerland have entered into agreements with the EU on trade and labor mobility (European Economic Area, European Free Trade Area). As shown below, these three non-EU countries export as much to the EU as its members do. Such agreements could serve as a template for post-Brexit trade between Britain and the EU, if both sides see it in their mutual self-interest.
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