London: A disorderly exit by the UK from the European Union could wipe as much as $1.6 trillion from future mergers and acquisitions, a new study says.

The absence of a clear Brexit road map could lead to a cycle of political and market uncertainty and hit near-term investment plans and business confidence, according to Baker & McKenzie’s Global Transactions Forecast, which is based on financial modelling by Oxford Economics. With growth forecasts for the UK economy halved to 1.1 per cent for 2017, merger volumes will also dip by at least $240 billion in the next five years, according to the report.

The uncertainty created by the UK. June 23 vote to leave the European Union has already had an impact. Global M&A so far this year is down 16 per cent to $1.5 trillion from the same period in 2016, according to data compiled by Bloomberg. Stock market sales have declined 63 per cent over the same period to $206 billion, the data show.

Yet it isn’t all gloom and doom. In the month since the U.K.’s referendum, about $103 billion in deals involving European companies have been announced — including SoftBank Group Corp.’s $32 billion bid for Cambridge, England-based ARM Holdings Plc and Paris-based Danone’s agreement to buy WhiteWave Foods Co. — according to data compiled by Bloomberg.

“In the last few days we have seen evidence that the M&A market in the UK won’t come to a crashing halt even if it won’t be at its previous pace,” said Tim Gee, London merger partner at Baker & McKenzie. “London will also retain a remarkable concentration of financial, legal and economic talent.”

The impact of Brexit won’t lead to a global “Lehman moment,” and the study’s central scenario shows global merger activity “only modestly down for the next two years before fully recovering,” the report said.

In a similar report in 2015, Baker & McKenzie forecast that fallout from a Greek exit from the euro could wipe as much as $1.4 trillion from future M&A.

Under the more adverse scenario, Monday’s study forecast a significant slowdown in Eurozone growth and a 40 per cent drop in mergers in the region, excluding the UK, in 2017, compared with if the country had voted remain.