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Brexit risks increase to 35%, says Berenberg

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Staff writer ▼ | January 28, 2016
Tensions in Europe   Brexit could prove harmful for the economy

Economists at Berenberg see an increased likelihood of a British exit from the European Union after a shift in public opinion polls towards the "leave" campaign.

According to reports earlier in the week the UK will go to the polls on June 23, to vote in a referendum on continuing membership of the European Union.

The German bank upped its risk of a Brexit to 35% from 30%, saying its monitoring of newsflow had shown a fivefold increase in "Brexit news" since the start of the year, with events in Cologne and Paris adding to the heavy flow of news on the EU migrant crisis.

Berenberg's senior UK economist Kallum Pickering said: "The risk that the EU referendum becomes a vote on immigration rather than about membership of an economic and political union is a significant threat".

He noted that sterling pricing was beginning to reflect heightened risk, with the pound weakening by over 6% in the last month.

Pickering said if risks remain elevated or even increase leading up to the vote, "heightened uncertainty is likely to cause a modest disruption to economic and financial market activity until after the referendum has passed".

UK business interests are generally supportive of the UK remaining in the EU, with economists having warned that a Brexit would prove harmful for the economy.

Bank of England Governor Mark Carney said that Brexit fears could pose a current account deficit risk, part of the rate-setting committee's reasoning behind delaying an eventual rate hike.

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