Brexit will have ‘worse economic impact on UK than EU’

Brexit will have a bigger economic impact on the UK than the European Union, the former head of the European Central Bank has told BBC Radio 5 Live.

Jean-Claude Trichet added the break-up was “totally contrary to the new world” of large emerging economies, with single currencies and single markets.

Asked how Brexit would affect the other EU countries, he said: “It’s very much a question of proportion.”

The EU’s economy is worth about £13tn, compared to the UK’s £2tn.

Speaking to the Wake up to Money programme, he said: “If I take the EU as a whole and compare the GDP of the EU to the GDP of the UK, you see there’s a small portion which is the UK.”

He added: “It’s normal that the European 27 are less impacted themselves than the UK by this event which has been entirely decided upon by the UK – when all the 27 wanted the UK to stay.”

‘New world’

The EU is the UK’s biggest trading partner, accounting for nearly half of all exports in 2016, according to official figures.

Brexit supporters argue new, lucrative trade deals can be made with fast-growing emerging markets.

Mr Trichet suggested Brexit will also be detrimental to the EU at a time of economic growth elsewhere in the world, arguing that it should be avoided “for the sake of the UK in the very long run, and for the sake of our continent”.

He said: “In a period when India, China, Brazil, Mexico, Indonesia, and all emerging economies are going very fast and are dwarfing Europe more and more, how can it be that we decide to separate ourselves, to split? It is totally contrary to the new world.

Rising debt

“How many single markets with a single currency will we have which will be enormous in 10 or 20 years’ time? Look at India, look at China, look at all those emerging countries.

“I am a little bit passionate because I think that there’s something which goes against what would be a good strategy for all Europeans.”

Mr Trichet ran the European Central Bank from 2003 to 2011, overseeing its response to the 2008 crash and the Greek debt crisis. He’s now concerned about rising public and private debt levels around the world.

“We see financial leverage continuing at a pace which is not sustainable and we should, at the level of the international community, be much more aware of the fact this global financial leverage is dangerous and could be one of the causes – not the only one – of the next crisis.”

He added: “If we had a new crisis nobody would forgive the international community for not having taken the appropriate steps to avoid it.”