UK equity market could fall 15% under Brexit

Study into effects of Brexit has found the wider European equity market could also fall 8%. 

A recent study has found the equity market in the UK could plummet 15%, should Britain decide to leave the EU in June this year.

It looks into the scale of ‘shocks’ to equities, FX, rates and credit markets using the global multi-asset class APT factor risk model.

The predicted shock to equities is significant with a 15% drop in the UK and an 8% decline in the wider European market.

The study, carried out by software and technology provider FIS, also used resources like Fitch ratings, which stated: “The inherent uncertainty about the implications of a Leave vote may add to financial market volatility and result in a sterling depreciation.”

A report authored by Blackrock anticipates financial market volatility and sterling depreciation under Brexit.

It said: “Portfolio inflows could falter, pressuring domestic sources of funding for the budget deficit. We could see bank-funding costs rise and credit spreads widen.”