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Consensus among Global Investors that Brexit will Damage European Economy

Investors braced for stock market turmoil in UK and Europe if Britain leaves the European Union

Emma Simon 16 June, 2016 | 1:24PM

With just a week to go to the EU Referendum, there is almost universal agreement amongst global investors that a Brexit vote would cause havoc on stock markets and damage both the UK and European economy.

This consensus among investors seems in stark contrast to the divided views of politicians about the financial consequences of the UK leaving the European Union.

The study, by the Rivel Research Group found that just 3% of UK investors thought the European economy would improve if Britain was to exit the European Union. This negative sentiment was just as strong among continental European investors, with only 2% of respondents expecting the European economy to be better off in a Britain-less future.

This message was echoed by investors in the US and Asia/Pacific with only 1% and 3% respectively seeing Brexit as positive for the European economy.

Stock Market Turmoil 

The study also revealed investors are braced for a shock in both UK and European stock markets if the Referendum results in a “Leave” vote. More than two-thirds of UK investors expect that a Brexit vote will have negative impact on the UK stock market; a view shared by 76% of Continental European investors.

This turmoil could extend beyond the London Stock Exchange: 73% of UK investors and 60% of European investors are expecting a negative impact on Eurozone stocks.

Claire Lavery, the vice president at the Rivel Research Group said: “A very strong belief has developed amongst both UK and global investors that a Brexit would be bad for the European economy. Virtually no investors see Brexit as having a beneficial impact on the European economy. The message is clear from investors: don’t do it.

“In a world where there is almost always divergent opinion, the opinion over Brexit is overwhelmingly one-sided. Global investors see Brexit as bad for the economy and bad for UK and European stocks.

“Such a stark consensus may be fuelled by fears over a further destabilisation of the eurozone and a potential weakening of Europe’s ability to cope with terrorism and deal effectively with the refugee crisis. But ultimately, Brexit is what the market fears most: uncertainty.”

The Rivel Research Group is a marketing research firm that focuses on analysing date from the investment community. As part of this study it canvassed opinion of 333 global buy-side investors. 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk

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