London (dpa) – European economies must use their relative strength to plan for long-term risks, including the possibility of slow and complex Brexit negotiations affecting both Britain and EU nations, the International Monetary Fund warned on Monday.
“All European economies are growing, and the continent has become an engine of global trade,” the IMF said in its regional economic outlook.
“But countries should make some room in their budgets for manoeuvre so they can keep their economies afloat in worse times,” it said.
It warned that many European nations, after recovering from the 2008 financial crisis, “still have only a thin cushion accumulated for a rainy day,” with weak productivity growth and remaining bad loans.
“Ageing population, spreading protectionism, geopolitical tensions and export loss because of a downturn in China all add to the risks threatening long-term growth,” the IMF said.
It added that advanced economies with high public debt – including Britain, Belgium, France, Italy, Portugal and Spain – needed to lower their debt “without jeopardizing the economic uptick”.
Germany, the Netherlands and Sweden, three nations with “enough wiggle room in their budgets,” should aim to lift growth through higher public investment in infrastructure, housing and the integration of immigrants, it said.
It said Brexit brought the risk of “protracted policy and economic uncertainty on a broad range of issues” for both sides.
“If the United Kingdom leaves the European Union without an agreement, there will be a notable increase in trade barriers, potentially accompanied by disruption of services in various sectors, with significant negative impact on economic activity,” it warned.
## Internet links – [IMF’s regional economic outlook for Europe](http://dpaq.de/F3UJ3)