GAM claims Brexit impact on Europe ‘small’

Added 15th July 2016

The economic impact of Brexit on continental Europe will be small, according to investment director of European equities at GAM Niall Gallagher.

GAM claims Brexit impact on Europe ‘small’

While he noted there will be knock-on impacts from any UK downturn in trade with continental

Europe, he argued that these will be limited by the fact that UK trading forms only a small part of continental European gross domestic product.

Gallagher sees Brexit as “an asymmetric shock with the UK at the centre.”

“Continental European businesses may also behave more cautiously in their investment decision making due to higher levels of uncertainty, but we think these will be materially less than any uncertainty issues evident in UK business investment decision making over the next while,” he explained.

He does not claim that Europe has no concerns on the economic front however, but argues that these are well understood already.  

“There are of course still issues to work through in the continental European economies, such as the state of the Italian banking system, but this does not represent a change per se in what we already knew,” Gallagher said.  “Unless something goes dramatically wrong in continental Europe from here, we think this is primarily a UK issue and that has definite implications for how we approach our investments. The factors that we will have to monitor are: when does the UK activate Article 50[1] and, indeed who has the power to do it?; how pragmatic will the prime minister be in their negotiating stance?; and what is the reaction of the broad policymaking establishment in the EU-27 and what negotiating stance do they take?”

Gallagher added that GAM believes the key long-term trade-off for the UK may come down to single market access versus freedom of movement of people. While sympathetic to the idea that UK businesses should seek longer-term opportunities outside of Europe in the faster growing parts of the world the firm believes that exiting the single market without a trade agreement in place would be negative to the UK’s economic prospects for at least a few years and constitutes an act of “self-imposed economic harm.”  

Kames Income Hub


Vincent McEntegart, manager of the Kames Diversified Monthly Income Fund, explains how he aims to deliver a stable and sustainable income of 5% p.a.*, paid monthly, by investing in a range of asset classes

Square Mile Research

Lazard Emerging Markets
Lazard Emerging Markets

Talking Factsheets is a video service for users...

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address

About Author

Alex Sebastian

News editor

Alex joined Portfolio Adviser in April 2014 and has been a financial journalist since 2008. He has previously held editorial positions at the Financial Times Group and Euromoney Institutional Investor. Alex is NCTJ qualified and has a degree in economics from the University of Sussex.



Investment Strategy




PA Channel Island 2016
PA Channel Island 2016

8th November 2016
The Royal Yacht, Jersey


17th November 2016
The Andaz

PA Emerging Markets 2016
PA Emerging Markets 2016

1st December 2016
The Mayfair, London

Sponsored Content

Investment Strategy