Brexit poses risk to global growth: G20 nations
The United Kingdom’s departure from the European Union poses risks to the world economy, the G20 group has warned.
Brexit “adds to the uncertainty in the global economy,” finance ministers from the world's biggest economies said in a communiqué Sunday after a meeting in the Chinese city of Chengdu.
However, they said EU countries were “well positioned to proactively address the potential economic and financial consequences” of the historic Brexit vote.
“In the future, we hope to see the UK as a close partner of the EU,” they added.
British Finance Minister Philip Hammond expressed concerns, saying “the reality is there will be a measure of uncertainty continuing right up to the conclusion of our negotiations with the EU.”
“We have the option of a fiscal response, and we will do that on our normal timetable around the autumn statement,” he told reporters.
Hammond said the UK might deploy a stimulus package this fall to counter the negative effects of Brexit.
Before the meeting, the International Monetary Fund (IMF) downgraded its forecasts for global growth this year and next by 0.1 percentage point, to 3.1 percent and 3.4 percent respectively.
It said in a report that “Brexit marks the materialization of an important downside risk to global growth.”
Meanwhile, the UK economy has shrunk at its fastest rate since April 2009 -- the peak of the 2007-08 financial crisis following last month’s referendum.
Data from IHS Markit's Purchasing Manager's Index (PMI) show the composite index – which measures both services and manufacturing – dropped from 52.4 in June to 47.7 in July, a seven-year low. A reading below 50 indicates contraction.
On June 23, some 52 percent (17.4 million) of British voters opted to leave the EU, while roughly 48 percent (16.14 million) of people voted to stay in the union.
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