The recovery was shy in Europe. The Brexit “strengthens uncertainty” for the global economy. G20 central bankers think that added to terrorism, the output of the United Kingdom of the European Union is one of the threats to global growth.
Finance Ministers and Bank Governors central G20 meeting this weekend in Chengdu (southwest of China), the complicated negotiations on the divorce between London and the EU will stoke nervousness economic actors. However, the leaders of twenty major world economies have sought to reassure: “The G20 members are well positioned” to counter “dynamically” the potential impact of Brexit, they insisted in their final communiqué. The meeting, in the summer dampness of Sichuan, was dominated by the consequences of the British vote on already sluggish international environment background.
London remains the master calendar
The Fund International monetary (IMF) Tuesday lowered its global growth forecasts for 2016 and 2017 warning that prolonged uncertainty on Brexit could cause a drastic slowdown yet. “A major threat to growth materialized [...] Most of the remaining Brexit future, even more negative impacts are clearly possible,” insisted the institution this weekend.
London remains the master calendar to activate Article 50 of the European treaty on EU output modalities, which will trigger the opening of formal negotiations with Brussels. “We understand that they need time to prepare for negotiations, but they should not take more than necessary. The sooner the better, including in the interests of the UK, “responded Sunday in Chengdu European Economic Affairs Commissioner Pierre Moscovici.
” A dose of uncertainty “
discussions “should intervene calmer way, pragmatic and transparent,” added the US Treasury Secretary Jacob Lew. “If it turned to confrontation, it will be extremely destabilizing for the confidence [General]” added a US diplomat. Recently appointed as the Chancellor of the Exchequer, Philip Hammond, went to Chengdu to defuse ambient excitement.
“The truth is that a dose of uncertainty persist until the conclusion of our negotiations with the EU, “he admitted, however, told reporters. The British “are in a position of total unpreparedness,” commented for its part, the French Finance Minister Michel Sapin. “Supporters of Brexit were not aware of the difficulties, technical issues, the magnitude of the task. “However,” thanks to financial reforms “adopted since the 2008 crisis, the markets” were rather well [...] The Brexit is a problem, an issue, but not the disaster that could have been feared, “said temperate Michel Sapin.
beyond the British case “geopolitical conflicts” and “terrorism” after a series of deadly attacks in Europe, was quoted Sunday by the G20 as a factor “continuing complicate the economic environment. ” Considering that monetary policy already ultra-accommodative major central banks were not enough, several countries or organizations such as the IMF called on States having the means to beef up public spending to support a fragile growth.
structural Reforms
the final G20 communiqué calls him to use “all available tools” to revive economic activity and strengthen infrastructure spending, taking a formula already used earlier this year . And this, despite the reluctance of Berlin, who had lambasted fiscal stimulus “ineffective” and monetary policy “against-productive.” Germany prefers to focus on structural reforms such as labor market or privatization.
“But it would be wrong to oppose structural reforms in fiscal lever. The two work together, “warned Lew. “Structural reforms are necessary, but slow to implement and even slower to produce results. This is the budget level that States may act as soon as possible “, completed Michel Sapin. Other risks to the economy, the recent failed coup that shook Turkey, followed by a sharp authoritarian hardening in the country was discussed in Chengdu – but not mentioned in the final communiqué. Several diplomatic officials confirmed that the Turkish delegation had requested a statement of support to the government of President Erdogan, to which several ministers were opposed.
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