Get 40% Off
🤯 Perficient is up a mind-blowing 53%. Our ProPicks AI saw the buying opportunity in March.Read full update

Draghi sees Brexit vote hitting euro zone growth by up to 0.5 percent over three years: official

Published 06/28/2016, 04:17 PM
© Reuters. European Central Bank (ECB) President Draghi arrives at the EU Summit in Brussels

By Noah Barkin and Francesco Guarascio

BERLIN (Reuters) - European Central Bank President Mario Draghi told EU leaders on Tuesday the euro zone's cumulative growth may be between 0.3 and 0.5 less over the next three years than previously estimated because of the impact of Brexit, an EU official said.

Earlier this month, before Britain's June 23 EU referendum, the ECB estimated that the euro zone would grow in annual terms by 1.6 percent in 2016 and by 1.7 percent in 2017 and 2018.

The possible reduced growth rate may arise from a likely slowdown in Britain following its vote to leave the EU, and by a resulting slump in trade with the UK, one of the main commercial partners of the 19-country currency union, Draghi said.

Euro zone growth may also be affected by the higher cost of capital generated by lower stock prices, Draghi told the EU summit, according to the official.

Addressing the first gathering of the 28 EU heads of government since the referendum, Draghi also said there was a risk that people outside Europe might begin to view the EU as ungovernable after Brexit, the official said.

Draghi urged governments to address such fears with joint efforts and to deal with vulnerabilities in the banking sector.

He also reiterated his commitment to secure price stability and to cooperate with other central banks.

Draghi further told EU leaders that the composition of budgets should be more growth-friendly, the official said.

(Refiles to tweak lede paragraph to make clear growth may be reduced by 0.3-0.05 percent)

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.