Claims of impending economic doom if Britain votes to leave the European Union (EU) are exaggerated, a respected German economist has said.
Martin Hüfner, a former Chief Economist at Germany’s second largest bank HVB, said that many who think Brexit would lead to a global economic catastrophe are underestimating the ability of markets to adapt to new circumstances.
Writing on the German financial site Das Investment, Mr Hüfner said: “Of course there would be a variety of changes in Britain itself, in the EU and in countries with close ties to the United Kingdom. Britain and the EU would go their separate ways. This is a shame, in my view… but it is not a disaster.”
At present, only the elites including the financial sector want Britain to remain within the EU, he adds, with many ordinary voters fed up with the way the EU interferes with the “British way of life”. For that reason, European leaders should prepare themselves for a Brexit.
If Britain does leave, however, both sides will still rely on one another, and it would not be feasible for Europe to shut Britain out of major economic talks.
He also dismissed claims that the City of London would fall behind Paris and Frankfurt in terms of global economic influence as it will still have three major advantages: “The good people who work there, the English language and the geographical proximity to New York.”
While the rest of the EU may become less stable, with more states possibly withdrawing and Southern Europe gaining more influence, “it is not the end of the European project,” Mr Hüfner said.
A Brexit could even lead to a “Booming Britain” because Brussels bureaucracy will be eliminated, along with “protectionist and anti-competitive” legislation.
Mr Hüfner is not the first economic figure to speak out against so-called “Project Fear”. Last month, credit agency Moody’s said the negative economic impact of Brexit would be “small”, with the costs barely outweighing the benefits.
“A UK vote to leave the EU would create heightened uncertainty,” said Colin Ellis, Moody’s Chief Credit Officer, “which would lead to modestly weaker economic growth in the UK over the medium-term”.