BlackRock: Brexit would shrink financial services

The UK’s financial services industry would be scaled back in the event of a Brexit, according to the world’s biggest fund manager, BlackRock.

Equities, sterling and the London property market would all suffer in the event of a “Brexit”, its analysts warned clients. “Our bottom line is that a Brexit offers a lot of risk with little obvious reward,” vice-chairman of BlackRock, Philipp Hildebrand, said.

“We see an EU exit leading to lower UK growth and investment. Any offsetting benefits look more amorphous and less certain, in our view.”

BlackRock’s report suggests that British-based fund mangers would be blocked from the single market and that, in time, the EU could seek to move market infrastructure within the trading bloc.

At present, Britain has a surplus in financial, insurance and pension services of £18.5 billion, but post-exit regulatory challenges could see that eroded, said BlackRock, which has about £3.3 trillion of assets under management.

It added that the pound would be expected to bounce back if the UK chooses to remain in the EU.

Gerard Lyons, the Mayor’s economic adviser, told the BBC that there “would be an economic shock… for both sides” if Britain left the EU.