Trade Wars, Brexit Posing Downside Risks To Eurozone Economic Development - Report

BRUSSELS (UrduPoint News / Sputnik - 26th June, 2019) The ongoing trade wars between the United States and China and between the United States and the European Union, as well as uncertainty surrounding the UK's withdrawal from the European Union are posing downside risks to the development of the eurozone economy, the European Fiscal board (EFB), an independent advisory body of the European Commission, said in a report.

"The economic outlook is subject to significant downside risks. The forecasts for 2019 and 2020 have been progressively revised downward ... and further negative surprises are possible. A flare-up of further trade tensions between the United States and China, and between the US and the EU, would adversely affect external demand and investment. The outlook for external demand is further subject to the risk of a weaker-than expected recovery of emerging economies, particularly China. Substantial uncertainty also remains around an orderly withdrawal of the United Kingdom from the EU," the report said.

In May, the European Commission revised downward its forecast for eurozone economic growth from 1.3 percent to 1.2 percent, while the forecast for eurozone GDP growth in 2019 was lowered from 1.7 percent to 1.5 percent.

According to the European Commission, the eurozone GDP growth amounted to 1.9 percent in 2018.

Numerous experts have repeatedly said that if the United Kingdom performs a no-deal Brexit, this will result in very unpleasant economic consequences for both the country and the bloc.

The United Kingdom was supposed to leave the European Union in March but failed to do so because the parliament refused to back the withdrawal agreement proposed by Prime Minister Theresa May. Due to the situation, London was given an extension until October 31. Amid the Brexit deadlock, May resigned earlier in June but remained a caretaker at the post until a new Conservative Party leader is elected.

The United States and China have been trying to overcome disagreements that emerged in the wake of President Donald Trump's decision last June to impose the 25 percent tariffs on $50 billion worth of Chinese goods in a bid to fix the trade deficit. Since then, the sides have exchanged several rounds of duties.

Washington escalated the dispute in May when it included another $200 billion worth of Chinese goods in the 25 percent tariff category. Beijing pledged to retaliate by hiking tariffs on $60 billion worth of US imports starting in June.