FTI Consulting Survey Shows Deep Concern Regarding Economic Impact of Brexit on UK and EU Member States
30 June 2016 - 6:00PM
FTI Consulting, Inc. (NYSE:FCN), the global business advisory firm
dedicated to helping organisations protect and enhance their
enterprise value, today announced findings from a survey gauging
global institutional investors’ immediate reactions to the UK
referendum (informally known as “Brexit”) and their expectations
for its impact on the UK, the European Union (“EU”) and global
economies, as well as their portfolios.
Drawing from a pool of 100 institutional investors around the
globe with more than $8 trillion in assets under management
combined, the survey results indicated a strong majority of
investors believe the UK and EU economies will suffer significantly
as a result of Brexit. Notably, 67 percent of respondents believe
it is likely the referendum will trigger a recession, while 98
percent expect worse economic conditions in the near-term. However,
there is some optimism regarding the longer-term outlook, as 64
percent of respondents expect economic conditions to improve in
five or more years post-Brexit.
“The results announced today indicate grave concerns regarding
Brexit’s implications for the UK and EU economies in particular,”
said Edward J. Reilly, Chief Executive Officer of the Strategic
Communications segment at FTI Consulting. “This will be a
continually evolving process, with many uncertainties and
complexities that have wide-spread impact on capital markets
activity, corporate business decisions and the political discourse
across numerous jurisdictions. We are counselling our clients to
remain engaged, stay updated on the current state of play and to be
nimble in adjusting to changing market forces.”
The survey also suggests institutional investors are
particularly worried about the impact of the referendum on the
collective Eurozone economies, though they expect that any economic
damage will be largely contained to the EU.
“Respondents indicated they see France as most likely to face
immediate financial fallout, with 71 percent stating that the
French economy will be harmed by Brexit,” said Dan Healy, Managing
Director and Head of the UK Strategy Consulting & Research
practice at FTI Consulting. “That result tracks closely with the
overall sentiment towards the Eurozone economy, with 78 percent of
investors surveyed expecting a broader economic downturn across
Western Europe. On the other hand, only 4 percent expect Brexit to
harm North American economies.”
Other key findings from the poll include the following:
- A majority (56 percent) of institutional investors surveyed are
concerned the UK won’t have access to the EU common market, but the
concern is tempered with optimism – 58 percent consider it likely
that the UK will ultimately negotiate access.
- 7 in 10 respondents believe it is likely the fall in the Pound
Sterling will result in increased M&A activity for UK-listed
stocks, and a majority (55 percent) of respondents are closely
monitoring the UK M&A market. On a sectoral basis, those
surveyed are most interested in the expected movement in the
industrials (57 percent), consumer goods (48 percent) and
healthcare (45 percent) sectors.
- Only 25 percent of institutional investors claim to have
benefited from the referendum; however, most (63 percent) claim to
have been only slightly harmed.
- Nearly 8 in 10 (78 percent) of institutional investors surveyed
are moving to realign their portfolios as a consequence of the
Brexit vote, and almost half (46 percent) are seeking to safeguard
their investments. On the other hand, 46 percent have already moved
to take advantage of the volatility in the market.
- While there has been public speculation that the UK may not
actually leave the EU as a result of the referendum, 72 percent of
respondents expect that the UK will eventually trigger Article 50
and withdraw from the EU.
- The data indicates investors would like to be wrong in their
prediction of the UK leaving the EU – 59 percent suggested the UK
government should remain in the EU with a combination of 34 percent
recommending the UK negotiate better EU membership terms, 17
percent recommending that the UK government delay the withdrawal
processes wherever possible to maintain the present membership, and
7 percent recommending the UK government ignore the results of the
referendum altogether.
Further results can be found at
http://fticommunications.com/2016/06/global-institutional-investor-view-post-brexit-research.
Research MethodologyThis research was conducted
online by FTI Consulting’s Strategy Consulting & Research team
between June 27 and June 29, 2016, among 100 global institutional
investors. Respondents were sourced from FTI Consulting’s network
and subscribed industry directories opting in to participate in
research.
More information on the results and methodology can be obtained
by emailingdan.healy@fticonsulting.com.
About FTI ConsultingFTI Consulting, Inc. is a
global business advisory firm dedicated to helping organisations
protect and enhance enterprise value in an increasingly complex
legal, regulatory and economic environment. With more than 4,600
employees located in 28 countries, FTI Consulting professionals
work closely with clients to anticipate, illuminate and overcome
complex business challenges in areas such as investigations,
litigation, mergers and acquisitions, regulatory issues, reputation
management, strategic communications and restructuring. The Company
generated $1.78 billion in revenues during fiscal year 2015. For
more information, visit www.fticonsulting.com and connect with us
on Twitter (@FTIConsulting), Facebook and LinkedIn.
Investor Contact:
Mollie Hawkes
+1.617.747.1791
mollie.hawkes@fticonsulting.com
Media Contact:
Dan Healy
+44 (0)20 3727 1239
dan.healy@fticonsulting.com
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