scotland prime ministaer

'The hit from EU exit will demonstrate itself as a persistent drag on a positive growth rate, rather than generating an on-going contraction'

Scotland is on course to hold a referendum to vote for independence and introduce its own currency before the UK leaves the European Union in 2019, JP Morgan has said.

Malcolm Barr, an economist at JP Morgan, said that there will be “pressure to hold a new referendum on Scottish independence” as the UK seeks a deal with the EU following its vote to leave the European project.

“Our base case is that Scotland will vote for independence and institute a new currency at that point [2019],” Barr said in a note to clients on Wednesday.

The note also stated that the UK will be unsuccessful in its negotiating process.

UK lawmakers are expected to try and establish access to the single market without accepting free movement of labour or contribution to the EU budget.

This means that UK is likely to end with “curtailed” access to Europe’s market, according to JP Morgan.

“The hit from EU exit will demonstrate itself as a persistent drag on a positive growth rate, rather than generating an on-going contraction,” JP Morgan said.

JP Morgan also acknowledges that a myriad of uncertainties exists around the future of the relationship between the UK and the EU.

“In our minds, however, It is useful to lay out a base case as to how we think things will play out from here. It highly unlikely events will align exactly to this script,” Barr said.

Nicola Sturgeon, Scotland’s First Minister has said that a new referendum is “highly likely” following the UK’s to leave the EU.

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