Brexit would hurt Britain more than eurozone, says ECB official

A European Central Bank official says that Britain’s exit from the European Union’s single market would hurt the bloc’s eurozone economies less than first expected, and that Britain would suffer most.

Yannis Stournaras, who is also governor of the Bank of Greece, told The Associated Press on Friday that while Britain’s decision to leave the EU is not pleasant and the negotiations will not be easy, “it seems that the effect on the euro economy will be much less than initially anticipated.”

Britain voted in June to leave the EU, and British Prime Minister Theresa May suggested the country could be heading for a definitive break from the EU’s single market. That would create tariffs for business on both sides, and the pound has plunged to 31-year lows on concern about the impact on Britain.

About Greece’s economy

Stournaras says Greece’s economy is performing well, and that it’s time for the eurozone creditors “to commit realistically to debt relief” and honour pledges it had made from as far back as 2012.

Stournaras said that “the most important thing” was for eurozone countries to satisfy the commitments they made in November 2012 for debt relief for Greece. This would entail mild debt restructuring, possibly including an extension of loan repayment deadlines.

Such a move would be “fair,” Stournaras said, as Greece’s economy had undergone “huge restructuring” since 2009, had achieved major successes and was now returning to normal.

He also said it would be better for international creditors to reduce the country’s budget austerity requirements, as that would help stimulate growth.

Stournaras said the government could meet the target for a primary budget surplus–that is, when not counting the cost of financing debt–of 3.5% of GDP in 2018. However, he said this was “very ambitious.”

A reduction of the target “will be better for growth” and could reduce taxation, he said, adding that the current program was “too tax-heavy.”

After some delays, the government is also now more committed to required privatizations, Stournaras said, although he noted not all ministers were on board.

Staff, with files from The Associated Press

The Associated Press is an American not-for-profit news agency headquartered in New York City.