Why the Risk of Brexit Alarms the G20
Posted by jonathanfryer on Saturday, 27th February, 2016
Finance Ministers and Central Bank Governors from the Group of 20*, meeting in Shanghai this week, have unanimously agreed that Britain’s possible withdrawal from the European Union (Brexit) could pose a risk to the global economy. In a draft statement from China’s business capital they highlight this as one of the most serious potential dangers confronting the world economic outlook. Growth in many of the leading industrial economies is sluggish and there are particular concerns regarding the performance of the two biggest economies, the United States and China. “The global recovery continues, but it remains uneven and falls short of our ambition for strong, sustainable and balanced growth,” a draft statement from the summit says. The statement notes that markets have reacted adversely to economic anxieties exacerbated by such things as Britain’s possible exit from the EU, as well as the European refugee crisis. The British Chancellor, George Osborne, has seized on the communiqué to underline why the British government’s formal position is to campaign for the UK to remain in the EU, despite opposition from many MPs within the ruling Conservative Party. The matter is being put to the British electorate in a referendum on 23 June, following Prime Minister David Cameron’s negotiations with his continental counterparts to promote limited EU reforms. Those campaigning for Brexit will doubtless maintain that this is another example of scaremongering by the “Remain” camp, but they should take note of the fact that the G20 is about as serious as it gets when it comes to global economic analysis and forecasting. The message is clear: Brexit would not just be a leap into the dark for Britain but would also cause instability within the EU and the wider world economy.
- The G20 comprises Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States of America, plus the European Union. For the first time, Egypt also joined the Shanghai summit.