Tags: Britain | EU | politics | finance | BoE | David Cameron | Mark Carney

Evans-Pritchard: Botched Brexit Could Lead to European Crisis

Image: Evans-Pritchard: Botched Brexit Could Lead to European Crisis

By    |   Friday, 11 Mar 2016 10:23 AM

All of Europe risks spinning into crisis if leaders mishandle Britain voting to leave the European Union in June's referendum, Ambrose Evans-Pritchard warns in the U.K. Telegraph.

“There is no blueprint for life after Brexit. Nothing like the European Union has ever existed before, and the political chemistry of leaving is so combustible that the consequences cannot easily be calculated,” Evans-Pritchard wrote.

But the scenario he predicts is indeed grim for a "Brexit," or Britain exiting the EU.

“British withdrawal would be a thunderous shock to the EU project. The immediate imperative for Europe's leaders at that point would be to patch things up and ensure a velvet divorce as quickly as possible to stop the crisis spinning out of control,” he said.

“France's Marine Le Pen likens Brexit to the collapse of the Berlin Wall. "It will be the beginning of the end. If Britain knocks down part of the wall, it’s finished, it’s over,” she said. Whether she is right or wrong depends on the statecraft of Angela Merkel, Francois Hollande, Mateo Renzi and Poland's Beata Szydło.

Morgan Stanley predicted the grim price Europeans will pay if they mishandle this event. Foreign investors would start to withdraw their $8.3 trillion of investments in the eurozone. There might be a bond run with Spain in the firing line.
"A U.K. departure would have repercussions for the whole continent," says Professor Otmar Issing, the founding chief economist of the European Central Bank.

To be sure, Bank of England governor Mark Carney warned lawmakers this week that a Brexit would create the "biggest domestic risk " to the country's financial stability,

Under tough questioning from the Treasury Select Committee, Carney stressed that the BoE was not recommending on how people should vote on June 23 and denied that Prime Minister David Cameron's Downing Street office had pressured him to present a bleak picture of a Brexit.

"The issue is the biggest domestic risk to financial stability, because in part of the issues around uncertainty," Carney told the committee.

"I would say that in my judgement the global risks, including from China, are bigger than the domestic risks."

Currency markets have already been rocked by fears that Britain could leave the 28-member bloc, with the pound sterling dipping to near a seven-year low against the dollar last month.

Opinion polls show that the campaign to remain within the EU is slightly ahead, but its lead over the "leave" campaign has narrowed in recent months ahead of the referendum.

(Newsmax wire services contributed to this report).

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All of Europe risks spinning into crisis if leaders mishandle Britain voting to leave the European Union in June's referendum, Ambrose Evans-Pritchard warns in the U.K. Telegraph.
Britain, EU, politics, finance, BoE, David Cameron, Mark Carney
423
2016-23-11
Friday, 11 Mar 2016 10:23 AM
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