NEW YORK: The odds of a breakup of the European Union have increased after Brexit, an outcome that could have "devastating" economic and political effects, JPMorgan Chase's chief executive said Tuesday.
JPMorgan chief executive Jamie Dimon, in an annual letter to shareholders, said he had hoped Britain's decision last year to exit the EU would have led the bloc to focus on "fixing its issues," such as immigration and rigid labor rules.
"Our fear, however, is that it could instead result in political unrest that would force the EU to split apart," Dimon said.
"The unraveling of the EU and the monetary union could have devastating economic and political effects. While we are not predicting this will happen, the probabilities have certainly gone up -- and we will keep a close eye on the situation in Europe over the next several years."
Regarding Brexit itself, Dimon expressed confidence the bank would be able to meet all its European' clients needs once Britain exits the EU following negotiations expected to take two years.
The bank doesn't foresee shifting much staff from Britain over the next two years, but "we do suspect that following Brexit, there will be constant pressure by the EU not to 'outsource' services to the United Kingdom but to continue to move people and capabilities into EU subsidiaries," Dimon said.
Dimon, who is chair of the Washington lobby group the Business Roundtable and sits on a CEO advisory board to President Donald Trump, also expressed support for international trade in the wake of criticism by Trump and others of major trade agreements.
Dimon called Mexico, a leading Trump target, a "long-standing peaceful neighbor" whose interests are intertwined with those of the United States.
"Our trade agreement with Mexico helps ensure that the young democracy in Mexico is not hijacked by populist and anti-American leaders (like Chavez in Venezuela)," Dimon said. "
"While there are some clear identifiable problems with NAFTA, I believe they will be worked out in a way that is fair and beneficial to both sides."
Dimon described the challenges with China as "more complex" and include cybersecurity and the protection intellectual property.
"However, there is no inevitable or compelling reason that China and America have to clash," Dimon said.
Dimon also reiterated stances on a number of other issues, voicing support for less onerous financial regulation and endorsing tax reform to eliminate the incentive for multinationals to move overseas.
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