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Press, Journal Article

It is not clear at present how serious the economic impact will actually be.

In the run-up to the Brexit referendum, the International Monetary Fund (IMF) had voiced

concerns that established trade links would be disrupted, causing serious regional and global

damage. The IMF also predicts that, until the terms of the UK's withdrawal have been

negotiated, the uncertainty will have negative implications for investment and will give rise to

additional financial market volatility.

Although the sharp depreciation of the pound sterling is likely to dampen the impact on the

aggregate UK economy for a time, it is important to keep the spell of uncertainty as short as


It is in the interests of both parties for the EU and the United Kingdom to quickly enter into

level-headed negotiations on their future relationship. Neither party will have anything to gain

from erecting trade barriers.

Negotiations should not revolve around treating the UK better than other countries such as

Switzerland or Norway, nor, however, should the objective be to make a political example of

the UK.

Ladies and gentlemen

The UK economy will bear the brunt of the Brexit fallout, although the pace of euro-area

activity might decelerate a little as well. And there is no way of telling what the political

implications will be.

Brexit will probably also place a strain on Germany's economy, particularly since the UK is

Germany's third most important export destination.

The Frankfurt financial centre alone might see new opportunities opening up, though that

would also call for political backing. We should welcome any businesses that shift their

activity from London to Frankfurt.

I see no need for any further loosening of euro-area monetary policy in response to the Brexit

vote. Monetary policy is already in highly expansionary mode, and it is doubtful whether

easing it further still would deliver any stimulus whatsoever. Monetary policy can be as easy

as it likes, but that cannot prevent political uncertainty from dragging on the economy.

The crisis that has now engulfed the European Union is a political one that needs to be

resolved in the political sphere.

5 Conclusion

Ladies and gentlemen

The Brexit referendum on 23 June marked a turning point in the history of European