Brexit won’t trigger another 'Lehman' crisis

Brexit won’t trigger another 'Lehman' crisis

The impact of the UK’s vote to leave the European Union will not cause a Lehman Brothers-like crisis, according to Principal Global Investors, although Brexit-related uncertainty is set to continue.

Global growth is likely to slow down as “Euro businesses wait for better clarity before investing”, said Principal’s chief global economist, Bob Baur, who noted that a number of British real estate funds had halted redemptions.

Regardless, Mr Baur says the impact will not be as severe as the collapse of Lehman Brothers in 2008.

“While the political crisis of Brexit will hang around for a long time, we think the global economy can weather this storm as it has several others, including the global financial crisis,” he said.

Mr Baur said that lower interest rates, no indication of systemic issues in the equity and fixed-income markets, and less leveraging on the part of the banks mean the current situation is fundamentally different.

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