“Global economic growth has been weak but stable in early 2016, and the view here —based on monetary trends and leading indicators — is that it will strengthen during the second half," Ward said. “[That] suggests that the negative impact of a Brexit vote on global markets would be smaller than many fear.”
Dave Haviland, a managing partner at Needham, Mass.-based Beaumont Capital Management, also believes that fears of a major Brexit-driven drawdown are overstated, as are concerns of an end to European unity. "They're not going to blow up the Chunnel. I believe something like 40 percent of the U.K.'s trade occurs with other EU memebr states. They're not going to all of the sudden have 40 percent of their goods, services and capital simply cease to transact."
Long-term consequences, on the other hand, depend more on the manner of the Brexit, says Arone.
“What will ultimately happen is that negotiations to exit the EU will likely take as little as a couple of years to upwards of seven years,” Arone says. “What’s interesting is that the ‘Leave’ campaign has been built on the idea that the U.K. would still have access to the European single market.”
In commentary drafted on Wednesday, Lyndon Man, senior portfolio manager at Atlanta-based Invesco, said that while the British could still participate in the EU economy, they would have to accept EU regulations, contribute to the EU budget and accept the free movement of people across their borders, issues that helped lead to the Leave campaign in the first place.
Also impacted would be cross-border banking, which is currently possible in Europe through EU legislation. A Brexit would undo 40 years of regulation, said Man, leading to a long and costly unraveling process.
“Even in the event of a Brexit, the U.K. will still be a EU member for at least two years to allow for a new relationship with the EU to be agreed to maintain access to the single market, and hence alleviate the risk of a ‘cliff-like’ impact,” Man said. “That being said, given that the financial service sector has a trade surplus with the EU, and London’s esteemed status as the key European financial center, it will be more sensitive to an exit.”
Haviland says EU rules requiring the free movement of peoples are the real focal-point of the Brexit debate.
European countries are experiencing an influx of immigrants from north Africa and the Middle East at a time when birth rates among indigenous populations are in decline, says Haviland. The growing presence of immigrant populations, who often have larger families, is viewed by some as a threat to their indigenous cultures.
“I think the Brexit is driven by trade much more by immigration and the movement of people rather than trade and finance per se,” Haviland says. “Right now there are a lot of issues with immigration, and the indigenous populations in Europe feel like they’re under pressure. There’s an overlay: These government systems are much closer to socialism than they are in the U.S., so people are wondering how they will pay for healthcare, pensions and education as immigration surges. The Brexit vote is nothing more than a manifestation of fear.”