Eurozone and UK to fall into recession in H2 -  Danske

Analysts from Danske Bank, expect the United Kingdom and the Eurozone to fall into recession during the second half of 2016 after the referendum  result.

Key Quotes:

“Following the UKs 'leave' vote, we expect both the UK and the euro area to fall into recession in H2 16 as the high uncertainty should result in declining investments. The US economy is also not immune to weakness in Europe.”

“Overall our global growth outlook is 0.4pp lower in 2017 due to Brexit compared to our previous Bremain scenario. That said, we do look for a modest recovery in global growth in 2017, but overhang implies the growth rate is low.”

“We expect both Bank of England and the ECB to ease monetary policy to support the economies. The UK voters' decision is also a game changer for the Fed and we expect it to be on hold for the next 12 months and hike in June and December 2017.”

“The risk to our euro area outlook is that the political uncertainty does not fade but spreads to other countries. The UK outlook also depends on how the withdrawal negotiations progress.”