Weekly Economic Briefings > Eurozone Weekly Economic Briefing

Two weeks on and perhaps the most surprising aspect of Brexit is the extent to which market concern has shifted to the continent, despite the UK being the epicentre of the original shock. Italy in particular has come sharply into focus, where opinion polls continue to suggest the government may lose Octobers constitutional referendum which is increasingly at risk of the same sense of populist backlash that sunk the remain campaign in the UK. The prospect of interest rates staying lower for longer and the potential for a renewed economic slowdown have also quickly undermined confidence in the Italian banking sector. At the margin, the available data hint at a slightly sharper slowdown in European growth as a result of Brexit than the 0.2 percentage points we currently factored in our baseline. On top of that, a sharp drop in German industrial production in May means that German GDP will almost certainly be materially weaker.