Head of IMF Christine Lagarde has warned that uncertainty around Brexit is likely to hinder Britain’s growth in forthcoming months as both investors and businesses are worried about how the situation will unfold and the losses they may have to take if it does not suit their predictions. As a former finance minister if France she knows how this uncertainty is affecting the business sector so she insisted that this prolonged situation will have a negative impact on British economy and hoped that a deal could be made quickly within the new grace period given by European Commission.
While speaking during the IMF Spring Meetings being held in Washington, she stated that if the uncertainty is prolonged it could impact investor confidence. She said that it would affect business decision making as they would have to delay expansions and work around supply chain disruptions if there is a no-deal Brexit situation. This situation of long delay in decision making will have a long term negative impact on the economy too. While expressing sympathy towards Britain’s corporate sector she also highlighted the contingency plans that are in place to protect them against negative impacts.
Ms. Lagard said that even the presence of contingency plans cannot stop disruptions that are likely to place if there is a no-deal Brexit situation and they will have to no option but to take the damage on their market share and possibly balance sheets too. Earlier too IMF and Bank of England had warned that no deal Brexit would shrink the UK economy. This time Ms. Lagard reaffirmed that it would be likely as the Brexit process was very disruptive and sad too. During its World Economic Outlook IMF has flagged the ongoing Brexit impasse as a major cause for delicate time of global economy along with trade tensions between US and China.