Baku, Azerbaijan, June 24
By Aygun Badalova - Trend:
The UK’s vote to leave the EU has clearly weakened the near-term outlook for the UK and global economies, but analysts of the British consulting company Capital Economics believe it will ultimately prove to be less damaging than many estimates have suggested.
The UK held a referendum June 23 on whether to leave or to stay in the European Union. Today, it has been announced that majority of the votes are in favor of leaving the bloc.
The outcome clearly creates considerable short-term uncertainty, which is likely to weigh on the UK economy in the coming quarters, analysts of the Capital Economics said in a report, obtained by Trend.
At the same time analysts noted that the UK will remain inside the EU for at least two years and possibly longer, and this will allow time to clear up some uncertainties, not least over the UK’s future trading relationship with the remainder of the EU and rest of the world.
While the direct economic impact on other parts of the world should be limited, business and investor confidence will presumably weaken in the near term, particularly in Europe, analysts believe.
Analysts said the UK’s vote to leave the EU is likely to cause further turbulence in Central and Eastern European (CEE) financial markets in the coming days and weeks.
“We think it’s unlikely that politicians within CEE would seek to hold their own referendums on leaving the EU. However, as we’ve warned before, a Brexit vote may embolden populists in the region, potentially leading to reversal of reforms and a deterioration in business environments,” analysts said.