G20 nations warn of Brexit’s risk to global growth

The outcome of last month’s referendum “adds to the uncertainty in the global economy”, they said in a communiqué after a meeting in China. But they insisted that EU member countries were “well positioned to pro-actively address the potential economic and financial consequences” of the vote, adding: “In the future, we hope to see the UK as a close partner of the EU.” The G20 cited several other factors complicating the global economic environment, among them “geopolitical conflicts, terrorism, and refugee flows.” 

But participants said Brexit was at the forefront of concerns at the meeting in Chengdu, the last before the grouping’s annual summit in the Chinese city of Hangzhou in September. Britain’s finance minister Philip Hammond – said the subject had come up “a great deal.” “The reality is there will be a measure of uncertainty continuing right up to the conclusion of our negotiations with the EU,” he said. 

Before the meeting the International Monetary Fund downgraded its forecasts for global growth this year and next by 0.1 percentage point, to 3.1 percent and 3.4 per cent respectively.

“‘Brexit’ marks the materialisation of an important downside risk to global growth,” IMF staff said in a report ahead of the meeting, adding that as it was “still very much unfolding, more negative outcomes are a distinct possibility”. Officials in Chengdu said protracted or acrimonious talks between the EU and Britain over the departure could heighten the dangers. 

“It won’t mean that they’ll get there in a week or a month. It’s a process that could take longer,” a senior US Treasury official told journalists on Saturday. “The thing that would be very disruptive to confidence is if this becomes a highly confrontational process,” he said. Other challenges threaten: a slowdown in the Chinese economy, as well as terrorist attacks and the failed coup in Turkey. 

Earlier this month, 84 people were killed in the French Riviera city of Nice when a Tunisian truck driver – suspected to be inspired by the Islamic State jihadist group – ploughed a 19-tonne vehicle through a holiday crowd. Last week a German-Iranian gunman – believed not to be connected to IS shot dead nine people in the German city of Munich before killing himself. 

“We condemn, in the strongest possible terms, the recent terrorist attacks,” the communiqué said. “We reaffirm our solidarity and resolve in the fight against terrorism in all its forms and wherever it occurs.” But the document did not mention the attempt to depose President Recep Tayyip Erdogan or the subsequent widespread crackdown on his opponents.