Macq-ro insights:Brexit,Keep calm and carry on

Brexit is a political and social shock for both the UK and Europe. The uncertaintyassociated with how developments will proceed will impact the global economicoutlook most prominently near-term through financial market turmoil. Centralbank policy, however, should act as an offset and help to ensure that negativeimplications for global growth will be only modest. This should enable the currentglobal expansion and long grinding cycle to persist.

The UK political process means there will be little clarity until at least September.While there are countless potential paths, our assumption is that in 4Q16the UKgovernment will invoke Article 50and begin negotiations for a relationship, at leastinitially, similar to that of European Economic Area (EEA) member states,maintaining single market access and ‘passporting’ but accepting free movementof labour.