BlackRock’s chief executive Larry Fink says that Brexit is likely to cause a short-term recession.
Speaking to CNBC, the chairman and chief executive said that the length of the recession hinges on what the Bank of England does next. HIs comments followed the decision by the Bank to hold interest rates.
“We’re pretty convinced that Brexit is going to cause a short-term recession, maybe longer depending on it. And maybe, obviously we haven’t heard the narrative from the Bank of England – maybe they want to wait and see evidence of a true slowdown before they do [make any moves],” he said.
He says his conversations with business leaders in the UK highlight that companies are not adding jobs in Britain, and instead will add jobs in Continental Europe, following the UK’s decision to leave the EU.
Fink added that he thinks global interest rates will be cut before they go up, adding that he is “worried” they will go lower before they go higher.
“I’m not predicting it, but if somebody told me the 10-year Treasury’s were at 75 basis points I would not be surprised,” he added.
Fink said that the current rally in the equity markets may not be sustainable.
“We’re seeing investors worldwide pausing. We have seen quite a large sum of money being pulled out of equities over the last year and yet we’re at record highs. This rally in my mind…I don’t think we have enough evidence to justify these levels in the equity markets at the moment,” he said