EU warns of uncertainty over Brexit, says economic growth could be lower

PanARMENIAN.Net - The European Union warned Monday, July 11 that Britain's economic growth could be 2.5 percent lower than previously forecast through next year as a result of the negative effects from the country's decision to leave the bloc, the Associated Press reports.

In a preliminary assessment of the costs of a so-called Brexit, the EU's economic affairs commissioner Pierre Moscovici said the increased uncertainty related to the June 23 vote to leave the EU will reduce Britain's GDP between 1 and 2.5 percent by 2017 compared to where it would have been had the country voted to stay.

The evidence has been piling up that the decision to leave has already taken its toll on the British economy. Aside from the volatility the decision ignited in financial markets, there are signs that the decision has jolted consumers and businesses.

A recent survey from market research firm GfK found that consumer confidence took a dive in wake of the referendum. The decline, which it said was the sharpest in 21 years, is important as consumer confidence is fundamental for household spending, a key ingredient of the British economy, AP says.

There have also been signals from businesses that they are putting investment decisions on hold as they try and gauge what the post-Brexit economic landscape will look like. Most importantly, they want to know whether Britain will have the same sort of access to the EU's single market.

Moscovici also said Brexit could reduce economic growth forecasts in the 19-country eurozone by between 0.2 percent and 0.5 percent through 2017.

However, he insisted that these weren't official forecasts and could be changed "if we are capable of limiting uncertainty and delivering the proper policy response."