Britain pushes G20 to warn against exit from EU
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George Osborne is pushing the Group of 20 leading economies to warn about the dangers of the UK leaving the EU, in the latest sign the government is seeking powerful global backing for the case for remaining in the bloc.
The chancellor’s drive to include a warning about Brexit in the official G20 finance ministers and central bank governors’ communiqué tomorrow underlines how seriously the government is taking the early stages of the campaign for the June 23 EU referendum, compared with its slower start in the 2014 vote on Scottish independence.
The government has already cajoled big business to back publicly Britain staying in, pressed the Bank of England to give an independent economic view of the merits of EU membership, and persuaded the head of the International Monetary Fund to speak out.
People close to Mr Osborne say he hopes a G20 endorsement for Britain staying in the EU will be an important outcome of the Shanghai meeting of finance ministers representing 85 per cent of the global economy.
Campaigners for Brexit, led by six cabinet ministers and Boris Johnson, the mayor of London, insist the UK economy would thrive outside the EU and have criticised moves such as Mr Osborne’s as scaremongering.
In bilateral meetings in Beijing on Thursday, Chinese officials expressed concerns about Brexit. G20 officials who have been party to early drafts of the communiqué in Shanghai said they expected there would be a reference to Brexit in the final version. “I predict it will [be included] because the UK will want it to,” a G20 official said on condition of anonymity.
Officials in London think it should be relatively straightforward to secure a mention as in the worst-case scenarios Brexit risks seriously damaging global financial stability. The G20 exists to promote stable global economic growth and warn about future risks.
The Treasury’s move to enlist the G20 to its cause was bolstered on Thursday by an independent survey of university economists in which 95 per cent predict Brexit would increase market volatility. The survey by the Centre for Macroeconomics at the London School of Economics found that over 90 per cent of respondents thought Brexit would heighten uncertainty in the real economy.
Christine Lagarde, head of the International Monetary Fund, said this week that ties between the UK and the EU boosted growth. Brexit, she said, “is bound to be a negative on all fronts”.
“Uncertainty is bad in and of itself,” she added. “No economic player likes uncertainty. They don’t invest, they don’t hire, they don’t make decisions in times of uncertainty.”
Michel Sapin, French finance minister, said: “What Europe wanted to do, what France and Germany wanted to do was provide the UK authorities with the best arguments possible in order to keep the UK within the EU.”
“We deeply believe that it’s best for the United Kingdom to remain within the European Union. And I believe that this opinion will be the majority opinion within the G20 member countries.”
Signs that the referendum itself might already be depressing investment emerged on Thursday as official figures showed business investment sank 2.1 per cent in the final quarter of 2015.
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