Brexit to hit in 2017 despite resilience so far - RBS

Analysts at RBS notes that the UK and Euro Area business and consumer sentiment surveys have remained resilient in the aftermath of the UK’s vote to leave the EU but Brexit was always likely to be a slow-burn negative and we expect its impact on the Euro Area to become increasingly evident in 2017. 

Key Quotes

“A prolonged period of uncertainty looks a significant risk to investment. However, the clearest impact may be through the trade channel as GBP depreciation and a weaker growth outlook weigh on import demand in the Euro Area’s second largest export destination. Coupled with a still subdued global growth and trade outlook, we see little support to growth from exports in 2017. Import growth looks set to remain slightly higher than export growth in 2017 and 2018, suggesting the contribution of net exports to GDP remains marginally negative.”