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UK’s exit from EU would be a “shock” to global economy: G20

The global economy will suffer a “shock” if Britain leaves the EU, finance ministers and central bankers from the world’s biggest economies including India have warned, boosting Prime Minister David Cameron’s strong stand against leaving the bloc.

A so-called Brexit would would be a “shock” that ranks among rising downside risks and vulnerabilities for the world economy, the G20 finance ministers and central bank chiefs said after a meeting here in Shanghai, China’s gleaming financial metropolis.

“Downside risks and vulnerabilities have risen, against the backdrop of volatile capital flows, a large drop of commodity prices, escalated geopolitical tensions, the shock of a potential UK exit from the European Union and a large and increasing number of refugees in some regions,” they said in a joint communique at the end of a two-day G20 meeting in Shanghai yesterday.

RBI Governor Raghuram Rajan along with Additional Finance Secretary Dinesh Sharma attended the meeting.

Britain will hold a referendum on membership in the EU on June 23, and markets are becoming increasingly concerned about the impact on trade, jobs and investment if voters choose to leave the bloc of 500 million people.

UK Chancellor George Osborne described the prospect of a UK exit from the 27-member European Union as “deadly serious.”

“The financial leaders of the world’s biggest countries have given their unanimous verdict. They say that a British exit from the EU would be a shock to the world economy,” Osborne told the BBC in Shanghai. “If it’s a shock to the world economy, imagine what it would do to Britain.”

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