Eurozone growth is likely to suffer if Brexit negotiations become protracted, according to the president of the European Central Bank, The Telegraph reports.
Mario Draghi described the UK as an important trading partner for the single currency area as he said Britain’s “destiny” would also impact the 19-nation bloc.
Mr Draghi said the eurozone economy had so far remained “resilient” in the wake of the Brexit vote, adding that action by the Bank of England and ECB had helped to avoid a “traumatic” reaction in financial markets.
An initial drop in share prices was followed by a “quick reversal”, while the real economy had also remained robust, he said.
However, he said the medium and longer term consequences of the UK’s decision to leave the EU were “much more difficult to foresee” and would “depend on the polices undertaken in the UK and the euro area”.
Mr Draghi said: “It’s pretty clear that the longer the uncertainty about the final outcome lasts, the more relevant the consequences will be. “[The UK is] an important destination for our exports, so the destiny of the UK does have an influence on the euro area.”
Mr Draghi also warned that negotiations between the UK and EU had to preserve the “integrity of the single market”.
Suggesting that policymakers could not bend the rules to accommodate the UK, Mr Draghi signalled that giving the UK special treatment could destabilise the bloc.
“It is of utmost importance that the integrity of the single market is respected. Any outcome should ensure that all participants are subject to the same rules,” he told MPs. “The four freedoms go all together, freedom of people, goods, capital, services. That’s pretty clear.
“It’s very hard to imagine that any agreement that would be perceived as discriminatory against some subjects in favour of others would be a source of stability for our European Union.”