Wrenching Outlook

"Brexit has thrown a spanner in the works." -- Maurice Obstfeld, IMF chief economist.

   Economic health in Europe will be hit hard as Britain leaves the European Union, according to the International Monetary Fund (IMF). And the fallout from the Brexit vote will spread to America and elsewhere, the IMF said.
   "Global growth, already sluggish, will suffer as a result" of the vote by the United Kingdom to leave the EU, the IMF said in its report on the global economy.
   Britain and Europe will be hit hardest by fallout from last month's Brexit vote, the IMF said. This means policy makers must strengthen banking systems and get to work on important structural reforms, according to the IMF.
   Specifically, the IMF said the UK economy will slow to a 1.7 percent growth rate this year, and to 1.3 percent next year.  Throughout the euro area, the countries using that common currency will see a growth rate of just 1.4 percent next year.
   Even so, the IMF warned that "more negative outcomes are a distinct possibility," as the effects of a British exit from the EU add economic and political uncertainty.
   In addition, the breakup will be felt globally, with slowdowns likely in the U.S., Japan, China and other advanced economies.