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Rathbones: Brexit will make asset managers bleed

Its report, If you leave me now – presumably named after the Chicago soft rock classic – picks holes in arguments around immigration, trade, financials, public finances and foreign investment.

Addressing the view that restricting migrants from the EU will lead to better prospects for UK workers, Rathbones asset allocation strategist Edward Smith stressed Brexit will not lead to wage growth or a substantial fall in unemployment.

He explained: “To conclude that immigrants have taken away jobs from UK nationals, the immigrant share of new jobs would have to be rising at a faster rate than the immigrant share of the working age population, but this trend has not occurred over the past two decades.

“Furthermore, if rising immigration were crowding out jobs for UK-born workers, then we should observe a relative rise in joblessness in areas that have received the most immigrants.

“However, looking at county data, there is no correlation between immigration flows between 2004 and 2012 and UK-born unemployment. This pattern also holds true even when one just looks at sections of the population earning low wages.”

The second myth, according to the report, is that the UK’s trade balance will collapse if it withdraws from the EU.

This view is predicated on the notion that the costs to EU consumers and firms of importing UK goods and services will become so prohibitive following Brexit as to immediately render them uncompetitive.

Around 50% of Britain’s exports currently go to EU countries and, according to Smith, the greatest risk to trade and to the UK’s trade balance in the short term actually stems from the imposition of tariffs.

He said: “Given that the UK is already set up to comply with EU regulation and various trade regimes, additional non-tariff costs in the short term would be broadly limited to more onerous burdens of proof. However, over the longer term, non-tariff barriers represent the greater threat.”

Part of the Bonhill Group.