Despite the devaluation of sterling and underperformance of UK equities already witnessed as a consequence of Brexit, there is "still room for further losses" under a no-deal scenario - particularly for UK assets - according to MSCI research.
Since the 2016 referendum, the pound has lost 9% relative to a trade-weighted basket of currencies, while the UK long-term yield is significantly lower than it was in June 2016.
In addition, equities have risen by just 17% over the period in sterling terms, in contrast to the MSCI World index which has gained almost twice as much in local currency terms, according to the research.
However, with Boris Johnson's appointment as Prime Minister there is now a greater likelihood of a "disorderly" Brexit, leading to further losses across asset classes as well as GDP, according to executive director of risk management solutions research at MSCI Thomas Verbraken.
He said: "With Boris Johnson becoming the new Prime Minister of the United Kingdom, the likelihood of a 'no-deal' Brexit is increasing. Based on an analysis published by the Bank of England (BoE) at the end of last year, a no-deal Brexit could have severe implications for the UK economy.
"In January, we assessed the impact of the two BoE no-deal scenarios on financial markets.
"Even though the pound has lost slightly and UK equities continued to underperform global equities (in local currency terms) since the beginning of the year, there is still room for further losses, particularly under the more severe disorderly Brexit."
The findings follow MSCI research published in 2017, which at the time predicted GDP growth would decrease by 9%, the pound weaken by 16% against the dollar and the euro, and the UK 10-year sovereign yield would increase by 20 basis points.
However, the latest research, which is in line with the main assumptions of the two most recent BoE scenarios, predicts equity markets could suffer a 23% drop.
In addition, while UK GDP growth has underperformed other regions already, this too could suffer further.
MSCI said: "The real impact - if there is no deal - has yet to materialise. Various scenarios we tested suggest a significant slowdown in the UK economy and large losses in its equity markets and exchange rate.
"Investors should continue to watch closely while preparing themselves for the worst."