The financial gnomes of Zurich take a dim view of Brexit
by Ambrose Evans-Pritchard
The Swiss bank UBS has warned that Britain risks a “sudden stop” in capital inflows and a 30pc crash in sterling if the country votes to leave the EU and negotiations turn ugly.
Invoking a traumatic scenario akin to an emerging market crisis, the bank said Britain has embarked on the referendum at an extremely delicate moment when the country has the worst current account deficit in the developed world and is dependent on foreign investors to plug the gap.
“The large external financing needs and the structure of the UK’s external balance sheet make the UK vulnerable to a sudden moderation in capital flows. Should Brexit trigger such a confidence shock, the UK’s economy could be forced back into balance,” said the authors, Themos Foitakis and Jeremy Chalder.