Schroders: chance of recession up to 40%


Schroders has this morning placed the chance of the UK entering recession at 35 to 40 per cent, while T Rowe Price says the chance of a global recession has risen 50 per cent.

In a call with press, Azad Zangana senior European economist, says markets would likely suffer a more significant shock than people anticipate and that the uncertainty from the last six months is set to continue.

Zangana warns the UK could see job losses, or at the very least a slow down in job growth. The UK would also experience ratings downgrades “across the board”.

Meanwhile, head of international fixed income at T Rowe Price Arif Husain says: “The vote to leave could result in a global recession. It’s likely that the chances of a global recession have risen above 50 per cent.

“Those who believe Brexit is a UK problem are misunderstanding the impact it will have globally. They’re forgetting the impact that Greece had – and Greece is much smaller than the UK, and not a financial centre,” Husain says.

However, French asset manager Amundi says while the Brexit vote may trigger a recession in the UK, it did not expect this to flow on to other European Union countries. 

“This crisis of confidence has no reason to endanger the economic recovery currently underway in the Eurozone as it is mainly driven by internal demand,” said the note from Didier Borowski, head of macroeconomics and Philippe Ithurbide Global head of research, strategy and analysis.

Invesco Perpetual head of European equities Jeff Taylor also thought a Eurozone recession was unlikely. 

Taylor says the ECB and key politicians in Europe, such as Chancellor Angela Merkel and President Francois Hollande, “know the risks and will more than likely use policy to counteract near-term stress. What form that takes remains to be seen, but it is highly unlikely they stand on the side-lines and watch the market panic.”