Brexit has naturally topped the agenda of the G20 Finance meeting in Xiamen, China. Whereas new British Finance Minister Philip Hammond tried to reassure his counterparts, they agreed that the Brexit increased global economic risks.
Last week, the International Monetary Fund (IMF) lowered its economic growth forecast for the United Kingdom (UK) from 1.9% to 1.7% and for the world economy from 3.2% to 3.1% for 2016. The IMF Managing Director Christine Lagarde stressed on the volatility of the financial markets and on the political uncertainty caused by the Brexit, a viewpoint shared by Hammond who acknowledged that there would be a certain amount of uncertainty till the end of UK’s negotiation with the European Union (EU).
Concerns also grew over the time needed for the whole negotiation to end. Indeed, whereas his G20 counterparts advocated that the process be the quickest possible, Hammond thought that two years would be a rather tight timeframe notably conditioned by European partners’ capacity to greenlight the arrangement offered by the UK. Since the Brexit was voted on June 23, 2016, the British Pound lost around 10% of its value and economists expected recession anytime soon.