Nearly £350bn could be wiped off the value of Britain’s top companies in the event of a vote for the UK to leave the European Union, analysts at UBS have warned.
In a note to clients, the bank said the FTSE 100 could fall as low as 4900 in the worst case situation after a Brexit vote, the lowest level since the height of the eurozone crisis in 2011.
But if the UK votes to remain in Europe, UBS says the leading index could climb as high as 6800. The FTSE 100 currently stands at 6245.
UBS strategist Yianos Kontopoulos said:
Following the risk-rally of the last few days, we believe there is significant room for downside in the event of a “Leave” vote. We estimate percentage moves in the mid- teens for UK and EU equities but materially smaller moves for the S&P 500 and emerging market equities.
As for currencies UBS expects considerable pressure on the pound, with up to 89p needed to buy a euro compared to around 77p at present. UBS said:
In a vote to leave, the pound would come under significant pressure, while risk currencies (Swiss franc and Japanese yen) benefit. Potential policy responses limit the degree of strength. We expect the effects on euro/dollar to be relatively muted.
