World financial leaders sounded a sour note on the global economy on Thursday, pointing to Britain’s possible exit from the European Union as a serious threat alongside China’s bumpy growth path and dissent over interest rates in the euro zone.
Concern that British voters are edging closer to leaving the EU in a June 23 referendum has spooked finance ministers, central bankers and other officials gathered here for the International Monetary Fund and World Bank spring meetings.
IMF Managing Director Christine Lagarde signaled policymakers’ heightened fears that a “Brexit” could derail Europe’s shaky economic recovery and reverberate further afield.
“We have clearly elevated ‘Brexit’ as one of the serious downside risks on the horizon of global growth,” Lagarde said in a press conference just two days after the IMF cut its 2016 global growth forecasts for the fourth time in less than a year.
Lagarde, who said it was her personal hope that Britain remain in the EU, predicted a divorce would lead to years of financial uncertainty.
EU Economic and Monetary Affairs Commissioner Pierre Moscovici chimed in at a separate event, describing the political repercussions of a British vote to leave the bloc as “very bad news.”
Their comments followed the Bank of England’s clearest warning yet that Britain’s economy would likely suffer and its currency slide if it bolted from the EU.
Moscovici added that the near-term European growth outlook was already worsening.
“Overall, we now expect GDP growth in the first quarter of this year to have been positive but slower than we had expected,” Moscovici said in a speech at the Peterson Institute for International Economics.