Eurozone warns on economic hit of Brexit

Eurozone finance ministers assessed on Monday the impact of the British decision to leave the EU, warning that the country risked becoming “Little Britain” in the aftermath.

At their first talks on Brexit since the June 23 referendum, ministers from the 19 countries that use the euro urged swift action on an issue that they said was causing problems across the European economy.

In its bleakest scenario yet, the European Commission, the EU’s executive arm, warned ministers that growth for the eurozone in 2017 could end up at just 1.2 percent, instead of the official forecast of 1.8 percent.

In a rosier scenario, the eurozone would grow by 1.5 percent next year.

“This is not a forecast, but a preliminary analysis,” said Economics Affairs Commissioner Pierre Moscovici at a news briefing.

Moscovici welcomed news that Theresa May is set to be named Britain’s next prime minister but said it was “essential” that the EU continued demanding swift clarification on the UK’s relationship with the EU.

“The British government should notify as soon as possible its intentions with the EU under article 50,” he said referring to the as yet triggered process for Britain to leave the EU.

Austrian Finance Minister Hans Joerg Schelling warned of the effect on Britain from its vote to end 40 years of membership of the European project.

“I think probably there will be a ‘Brexit-light’, so Scotland will not leave (the EU), probably Northern Ireland will stay in the union, and probably Great Britain becomes Little Britain,” he told reporters.

Jeroen Dijsselbloem, the Dutch finance minister who heads the Eurogroup of his 19 counterparts, made a similar call for haste after May looked set to replace Prime Minister David Cameron imminently.

“The sooner we can sort out — let me say it diplomatically — this problematic situation, the better,” Dijsselbloem told reporters.

“We look forward to working with whomever is coming out of this democratic process. And we will have to find solutions for the Brexit which has been causing a lot of problems, particularly for the UK but also for Europe.”

Cameron has left it to his successor to officially trigger Britain’s divorce from the EU and start talks on a future trade relationship, a process the rest of the bloc has urged London to do as quickly as possible.

Global markets have been volatile since the British referendum and the pound last week hit a 31-year low against the dollar, although it has since strengthened a little.