T. Rowe Price: chance of global recession is 50%

Arif Husain, the head of international fixed income at T. Rowe Price , believes there is a high probability of a global recession following the UK's vote to leave the EU. "Those who believe Brexit is a UK problem are misunderstanding the impact it will have globally. They are forgetting the impact that Greece had – and Greece is much smaller than the UK, and not a financial centre,” Husain explains.

"The vote to leave could result in a global recession. It is likely that the chances of a global recession have risen above 50%. For investors, the money was to be made in the run-up to the referendum from all the volatility that was occurring. It will be harder to make money now." T. Rowe Price senior fixed income portfolio manager Quentin Fitzsimmons says sterling is highly vulnerable, as UK business confidence is likely to fall and the country already has a large current account deficit. However, he believes fears the pound could move toward parity with the US dollar are tenuous. "Sterling is a reserve currency, is widely traded, and is a store of value – when it falls to a certain point there will be buyers, and that will prompt a correction. It will certainly weaken, but fears that it will tumble endlessly down are unfounded," Fitzsimmons says. "However, the prospects of a cut to UK interest rates have risen as a result of the vote to leave. We adopted some modest hedging positions ahead of the vote, but did not take a major bet on the outcome." Fitzsimmons also expects divisive negotiations between the UK and the EU. "The power of economic self-interest should not be underestimated,” he adds. "France will probably want to make it very difficult for UK financial services firms to operate on the Continent.

However, Germany might be inclined to be more flexible because its car industry is heavily reliant on exports to the UK and it would not want to lose that trade. "Different countries in Europe have varying levels of tradedependency with the UK, which could make negotiations within the EU very complicated. It could be divisive."