Arab Today, arab today could british eu exit be watershed for global economy
Last Updated : GMT 03:45:40
Arab Today, arab today
Arab Today, arab today

IMF Managing Director Christine Lagarde

Could British EU exit be watershed for global economy?

Arab Today, arab today

Arab Today, arab today Could British EU exit be watershed for global economy?

IMF Managing Director Christine Lagarde
Frankfurt - Arab Today

A British exit from the European Union could cause global market swings for a while. But that would soon pass.
If we’re lucky, that is.
Much darker scenarios for the global economy are also being discussed by economists as they try to gauge the risks of Thursday’s referendum for the wider world.
While economists say a British exit from the EU — or Brexit, as it is known — would be painful mainly for the country itself and to a lesser extent for rest of the Europe, the consequences for the global economy are harder to estimate.
In the gloomier narratives, a Brexit becomes a turning point, an event that snowballs and leads to much larger and nastier problems. 
It could deal a setback to free trade and globalization, which many disgruntled voters around the world are already cool on. And it could trigger more defections from the EU, destabilizing the region and unsettling companies and consumers.
So forecasts are ranging from the benign to the apocalyptic.
Some, like outgoing Finnish Finance Minister Alexander Stubb, compare Brexit to the 2008 collapse of US investment bank Lehman Brothers, which spread financial ruin across the globe. Or, it could be more like Y2K, in which computers worldwide were supposed to fail on Jan. 1, 2000 because software was written for years beginning with 19-. In the event, not much happened.
Here’s a quick run-through of the global risks from a Brexit.

FLIGHT TO SAFETY:
It’s reasonable to assume that a vote to leave would cause global financial market swings in the short term, with investors selling riskier assets such as stocks and seeking safety in government bonds, analysts say. 
The pound has already fallen in value against other currencies and would likely fall more. Gold, seen by some as a refuge in troubled times, might rise.
Markets seem to be betting that “remain” will win, so if they’re wrong, there could be some scrambling to adjust.
LOWER FOR LONGER:
Faced with churning markets, central banks could try to steady things with extra loans for banks or other ways of making credit more readily available. 
Market swings could help persuade the US Federal Reserve to postpone interest rate increases once thought likely this year and now in doubt. That could be good news for mortgage holders but could prolong savers’ agony over low rates and non-existent returns on deposits.

MANAGEABLE?
The direct impact of a Brexit would likely not be too bad on growth — if you’re not British. 
A year after a vote to leave, Britain’s economy would be one percent smaller than it would have been otherwise, while the 28-country EU would lose 0.25 percent and the world 0.1 percent, according to Moody’s Analytics chief economist Mark Zandi.
“I think the immediate effect is modest,” he said. “It’s not cataclysmic in any way. It’s corrosive, certainly. It diminishes the UK economy going forward.”
Taking 0.1 percentage point off global growth might not seem like much, but the world economy, though not in crisis, is not in great shape right now. 
The International Monetary Fund predicts 3.2 percent growth this year and 3.5 percent next year. IMF head Christine Lagarde says that’s not enough to lift living standards and get the globe’s 200 million unemployed back to work. 
“There is a risk that middle class families and the poor actually remain behind, which would embolden the voices of protectionism and fragmentation,” she said in April.
The World Trade Organization says international trade will remain sluggish this year, growing 2.8 percent, well below the average of 5 percent since 1990.
And the effects of a Brexit could be long-lasting: permanently lower growth in Britain and Europe. After five years, Britain’s economy would be 4 percent smaller than otherwise; the EU 1 percent and the global economy 0.25 percent, according to Zandi.
So it could add up.

UNCERTAINTY:
The “U-word” is prominent in most assessments of Brexit. That’s because it would take years for Britain to sort out new trade relationships if it leaves the EU, whose members trade freely with each other without charging tariffs. Businesses wouldn’t know where to locate production or how much it would cost to trade.
The EU and Canada, for instance, have been negotiating a trade agreement for seven years.
And uncertainty can be very hard on growth. It makes executives hold off on building new plants or hiring permanent employees, while consumers might wait on buying a new car or kitchen.
Uncertainty is one reason investment is relatively weak in the developed world. A Brexit would only add another reason to wait.
THE BUTTERFLY EFFECT:
Although the direct impact seems manageable outside Europe and the UK, economists can’t help painting darker scenarios.
If other countries decide to leave the EU or if a “leave” vote energizes populist political forces and leads to a broader retrenchment in trade and globalization, a Brexit would be seen as a turning point with outsized influence on the globe.
Polls in France, for instance, show anti-EU candidate Marine Le Pen of the National Front will almost surely make the final round of next year’s presidential election. 
In the US, presumptive Republican presidential nominee Donald Trump has criticized the North American Free Trade Agreement, or NAFTA, and talked about imposing new tariffs.
Economist Zandi invoked the metaphor of the butterfly that flaps its wings and triggers a chain of events that builds into a hurricane.
“Nothing good comes out of Brexit,” he said. 
“It’s just different shades of grey. It has global implications under the greyest scenarios, where Brexit sets off, is a catalyst for, another existential event for the eurozone and the European Union more broadly, that it empowers all the political centrifugal forces that are at work in Europe and Europe starts to fracture.”
“That would have serious implications for Europe, and also for the global economy,” he said. 
“It’s quite easy to construct scenarios where this plays out very badly over time.”

Source: Arab News

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today could british eu exit be watershed for global economy Arab Today, arab today could british eu exit be watershed for global economy

 



Arab Today, arab today
Arab Today, arab today Tourism shows signs of recovery

GMT 09:59 2017 Monday ,20 February

Tourism shows signs of recovery
Arab Today, arab today Sarah Belamesh designs antiques of "ceramic"

GMT 19:45 2017 Monday ,20 February

Sarah Belamesh designs antiques of "ceramic"
Arab Today, arab today Top Yemen commander killed

GMT 09:55 2017 Wednesday ,22 February

Top Yemen commander killed
Arab Today, arab today Media host Mona Iraqi stresses her show's success

GMT 15:32 2017 Wednesday ,22 February

Media host Mona Iraqi stresses her show's success

GMT 13:17 2017 Wednesday ,15 February

Yemeni accuses militias of challenging oil

GMT 09:12 2017 Saturday ,11 February

Algorithms: the managers of our digital lives

GMT 09:07 2017 Saturday ,11 February

The biggest players today on Wall Street? Algorithms

GMT 08:15 2017 Saturday ,11 February

Tesla chief in public feud with auto workers union

GMT 06:23 2017 Thursday ,09 February

Oil market can cope with higher shale output

GMT 14:10 2017 Friday ,03 February

Reasons of growth rate conflicting numbers

GMT 21:05 2017 Tuesday ,31 January

Drought caused decline in Morocco
View News in Arabic - Business: حوارات وتقارير
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today To hold social dialogue over secondary school

GMT 07:43 2017 Wednesday ,22 February

To hold social dialogue over secondary school
Arab Today, arab today 63-Year-Old Woman Delivers Baby

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby
Arab Today, arab today Milan laughs while Rome cries

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Nissan enhances sales in most markets

GMT 14:08 2017 Monday ,20 February

Nissan enhances sales in most markets
Arab Today, arab today Competes Sweden and Germans by S90

GMT 22:36 2017 Thursday ,16 February

Competes Sweden and Germans by S90
Arab Today, arab today Janat pleased for issuing 'Good Morning'

GMT 06:41 2017 Monday ,20 February

Janat pleased for issuing 'Good Morning'
Arab Today, arab today Small ponds have outsized impact

GMT 15:53 2017 Tuesday ,21 February

Small ponds have outsized impact

GMT 06:34 2017 Sunday ,19 February

Ahmed Fahmy stresses he did not ignore singing

GMT 06:50 2017 Wednesday ,15 February

Tragic fluctuations of Bakhtiari's life revealed

GMT 14:29 2017 Monday ,20 February

Prepares to present her new collection

GMT 14:06 2017 Friday ,17 February

London to tax old cars

GMT 23:29 2017 Thursday ,16 February

Home built on sand castles-style costs $8m

GMT 05:15 2017 Tuesday ,21 February

Omega 3 can reduce asthma cases

GMT 19:16 2017 Friday ,17 February

Aziz House ready to host the tourists

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 12:39 2017 Monday ,20 February

newest smartphone another winner for Huawei

GMT 19:10 2017 Friday ,17 February

Hats, scarves add beauty to women
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday