FRANKFURT: Financial markets have not “priced in” the risk of a no-deal Brexit and could suffer turmoil if the “worst-case scenario” materialises, top European central bankers warned on Monday.
The risk of Britain crashing out of the EU on April 12 is “something that we cannot neglect,” European Central Bank vice-president Luis de Guindos told European Parliament lawmakers in Brussels.
“Markets have not priced in the possibility of a no-deal scenario… just suppose that this worst-case scenario arrives, we have to be prepared,” he added.
European institutions and national governments “have taken actions… to minimise the potential impact” while “the private sector is more prepared… than it was only six months ago,” de Guindos said.
But with the eurozone economy slowing late last year and into the start of 2019, a disorderly Brexit “could be a sort of amplifier of the negative impacts and the downward trends” by undermining confidence still further, he said.