IMF Warns Of Negative Effect Of Continued Brexit Uncertainty
Following on from the latest EU emergency summit over Brexit, the UK will now remain a full member of the bloc until 31/10/19 unless the UK parliament ratifies the withdrawal bill allowing the UK to leave sooner. If stalemate persists, the UK could leave on 1/11/19 with no deal and no transitional period, a further extension might be granted (unlikely if there is still stalemate) or the UK could change its mind and remain in the EU either by revoking its notice of intent to leave or via a further popular vote of the British public (be it a confirmatory referendum or a straight repeat of the 2016 poll). All of this is fairly uncertain.
Christine Lagarde, Managing Director of the IMF, has warned that Brexit uncertainty will inhibit growth in the UK economy. Her comments were made before last weeks emergency EU summit.
Lagarde cautioned that businesses and investors will remain cautious whilst the future of the UK with (or within) the bloc remains uncertain, producing a negative impact on the British economy.
“If there was a prolonged uncertainty, we can suspect that the impact on confidence would continue because, you know, whether you're talking about investors, whether you're talking about decisions as to where to expand where to set up how to organize a supply chain, people are going to wonder, you know, what comes next and and how will it settle? So it would have a negative impact, no question about it.” Her comments were made at the IMF and World Bank spring meetings in Washington, USA.
Describing the situation as: “very, very concerning on the one hand and very sad", she went on to inject a personal note. "I grew up across the Channel and in the city of Le Havre, and to me being able to go across to Southampton, in an easy and unhampered way, was wonderful. Having my positive hat on it removes the risk of the no-deal Brexit on April 12, so at least the UK is not leaving on April 12 without a deal. We believe that the no deal Brexit would have been a terrible outcome."
The IMF described the current global situation as a “delicate time” for the global economy. Brexit is one factor contributing to downside economic risks for the global economy, but high levels of corporate debt in many nations and the continuing trade disputes between the USA and (mainly) China are also contributory factors.