12/05/2016 04:44 AST
Leaving the European Union would cause a decade of uncertainty that could cost Britain’s financial services an estimated 17 billion pounds ($25 billion) and make lawyers rich, a think-tank study said on Tuesday.
Analysts at JWG, which specialises in managing regulatory changes, takes no position on whether Britain should remain or leave the EU.
But it says if Britain votes to leave in June’s referendum, financial firms will end up trying to maintain business as usual while making fundamental changes.
“Rather than reduce red tape, UK businesses will be stuck with a rule book that could change by 60 per cent, while new court judgements change the rules of the game,” the 24-page JWG study of the impact of Brexit said
“The additional cost of Brexit to already bloated UK regulatory change budgets will be 17 billion pounds through 2026, not taking into account fines for non-compliance,” the study said.
Change would come in three waves: British regulators reshaping rules, EU rules rewired, and from 2022, global rules would be due for revision, it said.
Threat to economy
Britain’s economic growth should be slow and steady in the coming year but that would be under threat if the country votes to leave the European Union or if jitters over the world economy intensify, a Reuters poll found.
An overwhelming majority of the 60 economists polled this week said Britain voting to leave the EU in a referendum on June 23, a so-called Brexit, and global economic uncertainty were the two biggest risks to growth.
“There is little doubt that a potential Brexit poses huge risks to the outlook for the UK,” said Peter Dixon at Commerzbank in London.
“All sides agree that there will be short-term costs but coming at a time when global uncertainty is already high, there will almost certainly be some sharp market moves which in turn may impact upon decision-making in the real economy.”
The campaign to keep Britain in the European Union is 4 percentage points ahead of the “Out” campaign, though that lead has halved since February, JPMorgan said in an analysis of recent opinion polls.
If Britons do decide to stay a member of the bloc the economy will grow 0.4-0.5 per cent in all but one quarter through to September 2017, the poll found, little changed from an April poll.
Surveys have shown firms have adopted a “wait-and-see” position on investment and in the quarter after the vote, once the uncertainty has gone, growth should bounce to 0.6 per cent.
British economic growth slowed to 0.4 per cent last quarter, buffeted by a slowing global economy and worries ahead of the referendum, but probably of more concern to policymakers inflationary pressures remain almost non-existent. Inflation did hit its highest level in 15 months in March but at just 0.5 per cent it was still nowhere near the Bank of England’s 2 per cent target.
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