Make Kitco Your Homepage

IMF's Lagarde says Brexit delay avoids 'terrible outcome'

Kitco News

WASHINGTON (Reuters) - International Monetary Fund Managing Director Christine Lagarde said on Thursday a six-month delay of Britain’s exit from the European Union avoids the “terrible outcome” of a “no-deal” Brexit that would further pressure a slowing global economy.

But Lagarde, speaking at a news conference at the IMF and World Bank spring meetings in Washington, said the arrangement would prolong uncertainty and would not resolve the issues between Britain and the European Union.

Earlier on Thursday, EU leaders gave Britain another six months to sort out its departure from the 28-member bloc, but the reprieve offered no clarity on when, how, or even if Brexit will happen.

“At least the UK is not leaving on April 12 without a deal. It gives time for continued discussions between the various parties involved in the UK. It probably gives time for economic agents to better prepare for all options, particularly industrialists and workers, in order to try to secure their future,” Lagarde said.

“A no-deal Brexit would have been a terrible outcome.”

Brexit is one of the many economic risks that prompted the IMF this week to cut its global growth forecast for 2019 to 3.3 percent, the lowest rate since 2016, with a slight rebound to 3.6 percent expected next year.

“We contend that we are at a delicate moment,” Lagarde said.

“This expected rebound ... is precarious and subject to downside risks, ranging from unresolved trade tensions, high debt in some sectors and countries - both public and corporate - to the risk of weaker-than-expected growth in some stressed economies and, of course, the consequences of whatever Brexit will be.”

British finance minister Philip Hammond made no mention of Brexit in a statement issued before he departed to Washington, but said he would urge fellow policymakers to find ways to achieve sustainable economic growth and tackle climate change.

“Britain is at a turning point and our future is bright. We must work together with our partners across the world to create a safer, more prosperous and more sustainable economy for future generations,” Hammond said.

Lagarde also said IMF shareholders were still undecided on whether to recognize Venezuelan opposition chief Juan Guaido as the South American country’s leader, a step seen as required for the IMF and World Bank to provide aid.

President Nicolas Maduro’s socialist government has not requested any aid and Venezuela, which is mired in a deep economic crisis marked by widespread shortages of food and medicine, has shunned the IMF since 2004.

But the IMF is prepared to move quickly on a package once a decision on the leadership question has been made, Lagarde said. Her comments were echoed by David Malpass, the new president of the World Bank.

Reporting by David Lawder and Leika Kihara; Additional reporting by Rodrigo Campos and David Milliken in Washington and William Schomberg in London; Editing by Paul Simao

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.