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Brexit will not mark the end of days for the UK economy, strategist says

Key Points
  • U.K. Prime Minister Boris Johnson, who officially entered Downing Street on Wednesday, has vowed to deliver Brexit "come what may" by the October 31 deadline.
  • Johnson was announced as the winner of the Conservative Party leadership contest on Tuesday.
  • He comfortably beat former Foreign Minister Jeremy Hunt, receiving 92,153 of the party membership's vote to his rival's 46,656.
VIDEO3:0003:00
Brexit is not the end of days for the UK economy, CIO says

Britain's withdrawal from the European Union will not constitute the "end of days" for the world's fifth-largest economy, one analyst told CNBC Friday, amid intensifying fears of an abrupt "no-deal" exit in less than 100 days' time.

U.K. Prime Minister Boris Johnson, who officially entered Downing Street on Wednesday, has vowed to deliver Brexit "come what may" by the October 31 deadline — even if that means leaving without a deal in place.

A so-called no-deal Brexit is seen by many inside and outside of parliament as a "cliff-edge" scenario to be avoided at all costs. Leaving without a deal in place would mean an abrupt departure from the EU with no transition period allowing businesses to adjust to life outside the bloc.

"We don't think Brexit is the end of days for the U.K. economy to be honest," William Hobbs, chief investment officer of Barclays Investment Solutions, told CNBC's "Squawk Box Europe" on Friday.

'Totally unknown'

"Always be careful of listening to campaign trail patter and trying to translate it into policy," Hobbs said.

He explained this was especially important to bear in mind because the Conservative leadership contest had been decided by "a minuscule subset of the electorate."

Johnson was announced as the winner of the Conservative Party leadership contest on Tuesday. He comfortably beat former Foreign Minister Jeremy Hunt, receiving 92,153 of the party membership's vote to his rival's 46,656.

"That part of the electorate is known to be further to the right, more enamored with Brexit and all those kinds of things than the wider population — and indeed, the Conservative parliamentary party," Hobbs said.

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The pound may head toward $1.10 if there's a no-deal Brexit: DBS

Johnson is betting that the threat of economic disruption as a result of a no-deal exit in 97 days' time will help the EU's biggest powers to agree to revise the divorce deal that his predecessor, Theresa May, agreed to last November — but failed to ratify.

When asked whether Hobbs' team had assessed the potential impact of a no-deal Brexit, he replied: "Yes. And the answer — the honest answer — always has to be, in this situation, totally unknown."

'Adjustment period'

In Johnson's first speech to parliament as prime minister on Thursday, the former London mayor said he wanted to make Britain the "greatest place on earth" — echoing the patriotic rhetoric of U.S. President Donald Trump.

He also said the U.K. could become the most prosperous economy in Europe over the next three decades, a feat that would mean pulling far ahead of France and ultimately overtaking Germany.

The rise to power for Johnson puts an ardent Brexiteer in charge of the British government for the first time since the EU referendum in 2016 — a result which shocked the world and rattled financial markets.

"Let's face it, come the day, if we do go down the road of having something that resembles a Brexit as was originally planned, day zero is the day that any businessman can think: 'OK, so that's going to cost more, I have to sort that there and I can buy that cheaper there now,'" Sean Corrigan, director of Cantillon Consulting, told CNBC on Friday.

"There will be an adjustment period and there will probably be some losses taken. Some people will thrive, some people will not," Corrigan said.

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Boris Johnson can get a Brexit deal done: British billionaire

— Reuters contributed to this report.