'Brexit,' house prices loom over Bri­tish econ­omy: IMF

The Pak Banker - - FRONT PAGE -

Bri­tain's "strong eco­nomic per­for­mance" is at risk from high prop­erty prices and the loom­ing ref­er­en­dum on whether to leave the Euro­pean Union, the In­ter­na­tional Mon­e­tary Fund warned. In its an­nual health check pub­lished Wed­nes­day, the IMF said a "rel­a­tively pos­i­tive out­look" is sub­ject to "risks and un­cer­tain­ties." They in­clude the global out­look, slug­gish pro­duc­tiv­ity growth, high lev­els of house­hold debt and the June 23 vote on EU mem­ber­ship, the de­bate over which could un­der­mine busi­ness in­vest­ment. The warn­ing came as the pound fell for a third day amid con­cern Bri­tain might leave the bloc it joined 43 years ago. Bank of Eng­land Gov­er­nor Mark Car­ney sig­naled in tes­ti­mony to law­mak­ers Tues­day that of­fi­cials are pre­pared to loosen mon­e­tary pol­icy if needed should the econ­omy weaken.

IMF Man­ag­ing Di­rec­tor Chris­tine La­garde said in an in­ter­view with CNN that a U.K. exit from the EU would be "neg­a­tive on all fronts" and that un­cer­tainty in the run-up to the vote "is bad in and of it­self." "No eco­nomic player likes un­cer­tainty," La­garde said. "They don't in­vest, they don't hire, they don't make de­ci­sions in times of un­cer­tainty." The BOE should keep bor­row­ing costs at a record low while re­main­ing "vig­i­lant" in case in­fla­tion pres­sures emerge, the IMF said. In ad­di­tion, Chan­cel­lor of the Ex­che­quer Ge­orge Os­borne should be pre­pared to use the "flex­i­bil­ity" in his fis­cal frame­work to sup­port the econ­omy in the event of an ex­tended pe­riod of slug­gish de­mand.

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