Mr Bell adds: “We think it’s clear the uncertainty in the year or two after a vote to leave would be a drag on UK GDP because it would mean lower investment and it would mean greater economic uncertainty, which could potentially hit the UK economy by about 1 per cent per year.”
Even if the UK does stay, the effect could be felt more widely in Europe because it will spur other countries to go to the polls to settle whether they too want to stay in the union.
Steven Bell, BMO Global Asset Management’s chief economist, recalls: “It’s very interesting, actually. We had a conference with our colleagues from the Netherlands and we said, what do you think about all this? And they said they thought Brexit was a bigger issue for Europe than the UK.”
He goes on: “I’ve heard many people say they are deeply worried about the future for Europe should we choose to leave. Yes, I think it would be a dramatic change and there is talk about other countries holding referendums on leaving, Finland or Denmark perhaps.”
Until recently, asset managers had been wary of coming out in favour of either camp, but one of the most high-profile investment houses, BlackRock, has publicly set out its argument for staying in the EU.
Philipp Hildebrand, vice chairman at BlackRock, states: “While it is neither our practice nor our role to wade into political debates, we felt it was incumbent on us to help our clients think through the issues.
“Our bottom line is that a Brexit offers a lot of risk with little obvious reward. We see an EU exit leading to lower UK growth and investment, and potentially higher unemployment and inflation. Any offsetting benefits look more amorphous and less certain, in our view.”
Certainly it seems there is a lot at stake for the UK and the future of Europe both in the lead up to and in the aftermath of the referendum.
Ellie Duncan is deputy features editor at Investment Adviser
