NEW YORK (Reuters) - If Britain votes to leave the European Union next week the decision could accelerate the rise of populist political parties across the continent, a top executive at BlackRock (BLK.N), the world’s largest money manager, said on Friday.
The vote, scheduled for next Thursday, is unnerving investors and adding to their concern about the spread of divisive political rhetoric including in the United States, where Donald Trump has effectively won the Republican presidential nomination with controversial policies including calls for a temporary ban on Muslims entering the United States.
Mark McCombe, who runs BlackRock’s institutional client business, told the Reuters Wealth Management Summit in New York that if Britain votes to exit the EU, known as “Brexit”, it could provide a boost for anti-immigration parties in Europe.
”My own view ... is that actually there is a lot of pent-up frustration with Europe, within some of the key countries, and that actually we’ve seen it with Austria, and Germany and France and so forth, and the rise of these parties, I think it will only strengthen their resolve.”
Indeed, emboldened by a surge in voter support and Britain’s looming EU referendum, Europe’s leading far-right parties pledged on Friday to work towards a “Patriotic Spring” that would roll back EU powers and halt an influx of Middle East refugees.
McCombe, who is British, said it was impossible to predict the result but that if it was a tight vote to remain in the EU, UK Prime Minister David Cameron could lose his job.
“If it is ‘remain’ by 50.1 percent, I don’t know if Cameron survives,” he said, adding that the prime minister’s decision to hold a referendum had been a “massive own-goal”.
Investors are bracing for volatile trading conditions, and particularly the prospect of sharp one-off moves in sterling GBP=D4, after the vote.
McCombe said European equities would also come under pressure if Britons chose Brexit.
“Which analyst in their right mind will say, ‘oh this (a Brexit) is good news for Volkswagen’? I can’t see that scenario,” he said at the Summit, held at the Reuters office in New York.
Political risk is just one headwind for McCombe’s clients, including pension funds and insurers. They are also facing persistently low yields and slower global growth.
But he said that in the coming week he and his team would stay close to their UK clients and had scheduled a bunch of calls with them for the day after the vote.
Editing by Carmel Crimmins and James Dalgleish