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In a gloomy report for clients, it also warns that David Cameron could lose control over his fractious Conservative party whatever the result of the June 23 referendum, adding to the uncertainty hanging over the UK economy. [...]
“Our bottom line is that a Brexit offers a lot of risk with little obvious reward,” wrote Philipp Hildebrand, BlackRock’s vice-chairman. “We see an EU exit leading to lower UK growth and investment and potentially higher unemployment and inflation.”
Aside from citing a blend of economic risks, the report says: “A tight result or a feeling by Leave campaigners that it had not been a 'fair fight’ might see Cameron’s small parliamentary majority and authority over his divided party come under pressure.
“This spells trouble for post-referendum unity regardless of the vote’s outcome and would make it harder to pass controversial legislation.” [...]
The report says that any apparent fiscal gains Britain might enjoy from ceasing its contributions to the EU budget would be offset by the damage to the country’s financial services sector.
BlackRock, which has about $4.5tn in assets under management, warns clients to expect “volatility in UK and European assets rising ahead of the referendum” amid fears that a British exit could “spur separatist calls and embolden populist parties across the continent”.
It says “sterling is most vulnerable to Brexit fears” but that the pound would be expected to bounce back if the UK decided to remain within the 28-member bloc.
Full article on Financial Times (subscription required)