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Brexit would not hurt German economy short-term: experts

Brexit would not hurt German economy short-term: experts
UK’s possible exit would not hurt Germany’s economy in short term but might pose a serious political risk by provoking disintegration of EU, analysts say

BERLIN (AA) – The U.K.’s possible exit from the European Union is unlikely to hit Germany’s economy in the short term, but might have severe political consequences for Berlin by provoking the disintegration of the EU, analysts have told Anadolu Agency.

“Brexit should not affect Germany directly too much, but it affects the future of the EU as a political and economic formation,” said Grigory Vilkov, professor at the Frankfurt School of Finance & Management.

“I do not see large and immediate negative consequences for Germany, but it would have a more profound effect in the long run on Germany,” he added.

Britain will hold a nationwide referendum on June 23 on whether the U.K. should leave or stay in the EU.

EU’s economic heavyweight Germany has repeatedly stressed that it wants Britain to stay within the 28-member bloc. But Chancellor Angela Merkel’s senior ministers also made it clear that the U.K would see tough negotiations on its future ties with the EU, if it votes to leave the Union.

Cyrus de la Rubia, chief economist at HSH Nordbank, said the pure economic effects of a Brexit would be manageable for Germany.

However, the more important effect could come from the danger of political contagion. “If other countries felt inspired to leave the EU too, this could endanger the stability of the Euro area,” he said.

He underlined that the presidential election in France next year, in which right-wing populist Marine Le Pen is seen as a front-runner, would be critical.

“I would expect most of the negative effects to be felt in 2017 when negotiations between the U.K. and the EU may reach a dead end, while the fear of disintegration of the EU may escalate. In such an environment, companies will be reluctant to invest while consumers will start to save more and to consume less to be ready for tougher times ahead,” he added.

Ulrich Kater, the chief economist at Deka Bank, also said the immediate effect of a Brexit would be limited for Germany in the short term.

“In the case of a vote to leave, the immediate consequence would be a recession in the U.K. and a slightly weaker economy in Germany in the second half of 2016,” he stressed.

“We believe in the U.K. staying part of the European Union. Although the Union has to improve democratic governance, the Brexit camp has not managed to present a better alternative,” he said.

source: News Feed
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