Luis de Guindos, Vice-President of the European Central Bank, said that the UK’s withdrawal from the EU without a deal would deliver devastating effects to an already weakened European economy.
With less than six weeks until Britain is due to leave the bloc on March 29, 2019, UK Prime Minister Theresa May is yet to win ratification of British lawmakers for her Brexit deal with Brussels.
According to de Guindos, financial companies are well prepared to Brexit under the conditions previously discussed, but a scenario in which Britain exits the EU without an agreement is bound to hurt the euro zone. At the same time, the Vice-President of the ECB tried to dispel fears of a slowdown in inflation in the EU, saying that its level will, over the medium term, converge towards 2 percent.
As cited by the official, the ECB had the tools to react if needed, including by pushing back the timing of its interest rate hike, offering more long-term loans to banks, or continuing to reinvest proceeds from its bond portfolio.
However, it is important for the regulator to understand the causes of the economic slowdown in Europe, and only after that, to make a decision regarding the impact measures, de Guindos noted.
