The IMF is clearly not a fan of Brexit!

 The IMF is clearly not a fan of Brexit!

The International Monetary Fund (IMF) this week gave its professional assessment of the global economy – one of two gives each year. In its report it had downgraded its expectations of global economic growth to 3.2% for 2016, down from the 3.4% forecast in a January update and a 3.6% expectation given in October 2015.
The volatility in the stock market were named a key reason behind the downgrade, as was “violent instability” most notably in Syria and the knock-on effects of that, including increased nationalism in the UK and the upcoming European Referendum (EU) in June.

“One manifestation of increased nationalism is the very real possibility that the United Kingdom exits the European Union, damaging a wide range of trade and financial relationships,” IMF report said. “At the same time, across Europe, the political consensus that once propelled European unification is fraying.”
The IMF was clear in its view that if the UK does vote to exit the EU then the results for the British and global economy will not be good. During the Q&A session the IMF members present said they were preparing a more in-depth report on their views but that, as things stand and considering the high level of integration between the UK and the EU, the IMF’s director of research Mr. Maurice Obstfeld said “It is obvious that there is a lot of uncertainty at the moment about what will happen in June that it is weighing on confidence and investment in the UK.”

That the IMF mentioned the upcoming EU referendum and shared their views on what could happen if vote to leave the union in itself shows how closely they are watching developments here. It also highlights the importance of trade across Europe when it comes to the global economy.
What it tells is that we need to think very carefully before we make our decisions. Yes, there are lots of things about being part of the EU that we find frustrating. But, there are lots of things that we probably never even think about that are a great advantage to the British economy, jobs and attracting investment due to our closeness – proximity and deals – to trade across mainland Europe.

While the impact of our decisions will have an effect on the global economy, we must keep our eyes closer to home and consider just what the impact here, to us individually and as a country could be.

If we vote to leave the EU, will our status as a triple A economy remain, or will that prestige fall as companies leave our shores to do business in more financially sound locations? Or, free of all regulation from the EU, will we be able to set rules that entice more companies but on our terms only?
It seems the IMF is certain it will be the former and if that’s the case then fewer jobs means lower salaries, less money to spend and a larger Government spending bill on benefits and less tax returns coming in.
It be interesting to see exactly what the IMF foresees for the UK if we do leave the EU when it presents its more detailed UK report to the Government. In the meantime, the uncertainty this debate is producing is already beginning to have an effect on business and trading in the UK.

For some, the uncertainty over what Brexit might mean for them is encouraging them to take fewer risks and keep their financial matters on hold as they are. For the auction business that means that while there may be fewer potential buyers, for those who do attend sales, there is more chance of a bargain. In tough economic times there are always casualties in business. But, there are also people and companies that rise up after taking a brave step when others take a step back.
Whatever the result of the EU referendum, things won’t change overnight. So, why not take a brave step – you might be surprised at the rewards you reap when others are being cautious!

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