Friday, 17 June 2016

Euro Area Still Discussing What to Do if U.K. Votes to Leave EU

In World Economy News 17/06/2016

A United Kingdom flag flying next to a European Union flag
The euro area is still weighing what course of action to take should the U.K. vote next week to leave the European Union, while there is no “Plan B,” said Jeroen Dijsselbloem, the head of the bloc’s finance ministers group.
“Of course we are concerned; we’re following it closely and considering possible scenarios,” Dijsselbloem, also the Dutch finance minister, told reporters Thursday in Luxembourg. “Do we need to change our policy in the fields of financial stability or fiscal policy, etc? No.”
With a week to go before the U.K. holds its referendum on EU membership, polls are showing the “Leave” campaign ahead. Analysts have warned about potential spillover effects on the euro-area economy.
“We are in a much, much better situation than we were some years ago, also in terms of shock absorption capacity to deal with any shocks that might occur,” Dijsselbloem said, ahead of a meeting of euro-area finance ministers. “We hope and trust on the wisdom of the British people, as we always do.”
In London, Bank of England policy makers said a British exit from the EU could damage global markets and the world economy while EU President Donald Tusk told reporters in Helsinki that the EU was preparing “precise” and “proper” plans to deal with a British vote to leave.
“Short-term you’re going to have a lot of market turbulence, there’s no question about that,” Finnish Finance Minister Alexander Stubb told reporters on the way into the meeting in Luxembourg. “In the long term we’re probably looking at a significantly weaker U.K. and we’ll be looking also at a significantly weaker EU.”

Source: Bloomberg