October 21, 2016

Brexit: Obama warns on global growth after UK vote

EU leaders insist that access to the single market depends on freedom of movement of goods, workers, services and capital

US President Barack Obama has said the UK vote to leave the EU raises “longer-term concerns about global growth”.

He said Brexit would freeze “the possibilities of investment in Great Britain or in Europe as a whole”.

He appealed to the UK prime minister and other EU leaders to ensure an orderly process for the British exit.

Earlier EU leaders warned that the UK must honour the principle of free movement of people if it wants to retain access to the single market.

The leaders of the other 27 EU countries were meeting in Brussels without the UK for the first time in more than 40 years.

Mr Obama was speaking at a summit in Ottawa with the leaders of Canada and Mexico, aimed at strengthening economic ties between North American countries.

He said the preparations by central banks and finance ministers indicated that “global economy in the short run will hold steady”.

But he added: “I think there are some genuine longer-term concerns about global growth if in fact Brexit goes through and that freezes the possibilities of investment in Great Britain or in Europe as a whole.

“At a time when global growth rates were weak already, this doesn’t help,” the president said.

Catching breath

Mr Obama also strongly defended free trade and promised to press on with plans for a Trans-Pacific Partnership.

Without mentioning Republican presidential candidate Donald Trump – who opposes the plan – he said: “We’ve had times throughout our history where anti-immigration sentiment is exploited by demagogues. But guess what? They kept coming.”

Mr Obama said his main message to Britain and Germany was: “Everybody should catch their breath. I think that will be a difficult, challenging process, but it does not need to be a panicky process,”

The president said he had spoken to German Chancellor Angela Merkel and that her interest was making sure Britain’s exit worked, not retribution.

Mrs Merkel was one of many EU leaders to stress again on Wednesday that freedom of movement for EU citizens was an essential part of the single market – and that there would be no negotiations with the UK until the bloc was formally notified of its intention to leave.

After their meeting, the 27 EU leaders said in a statement: “Access to the single market requires acceptance of all four freedoms.”

The “four freedoms” that underlie the EU’s internal market are the freedom of movement of goods, workers, services and capital.

Japanese Prime Minister Shinzo Abe will have separate phone talks with British Prime Minister David Cameron and German Chancellor Angela Merkel later on Thursday, Japan’s foreign ministry said.

Mr Cameron announced he would resign after the campaign he led for his country to remain in the EU was defeated by 52% to 48% in Thursday’s referendum.

The outgoing leader said that he would attempt to “steady the ship”, but that it would be for the new prime minister to invoke Article 50 of the Lisbon Treaty, which would give the UK two years to negotiate its withdrawal.

He told parliament in London that the issue of freedom of movement would be difficult to resolve.

“Frankly, it’s a difficult issue inside the EU, where you’ve got all the negotiating ability to try and change things, and I think it will be in many ways even more difficult from outside,” he said.

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