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German finance minister: 'No negative effects' from Brexit on Europe

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Germany's Finance Minister Olaf Scholz. Photo: Michele Tantussi/Reuters

Germany’s finance minister said on Friday he sees no negative impact on Europe from Britain’s withdrawal from the EU next week.

“It will not have a big impact that the UK will have left the European Union in some days, and especially not because we avoided the Hard Brexit,” Olaf Scholz said during a panel at Davos. “This was the key question that impacted confidence in the business sector.

“On the continent, there will be no negative effect of this development.”

Scholz made the comments during a panel on the outlook for the world economy on the final day of the World Economic Forum’s (WEF) annual meeting in Davos, Switzerland.

European Central Bank (ECB) chief Christine Lagarde appeared alongside Scholz but struck a slightly more cautious tone.

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“Brexit is a little bit less uncertain, but we still have that possible cliff edge in December of 2020,” she said.

“We don’t’ know exactly what the trade relationship will be and it’s a big partner for the euro area, so that’s certainly a question mark.”

Britain is set to officially leave the EU on 31 January and move on to the next stage of negotiations with the EU, covering future trading relations.

While German finance minister Scholz said there would be no impact on Europe’s economy from Britain’s official exit, he predicted a bumpier road for the UK.

“It will be more difficult for the UK obviously because the business model must be reorganised,” he said. “There will be lower importance although, it will still be a very big place of financial activities in London but it will be different.”

US treasury secretary Steve Mnuchin sat alongside Scholz and Lagarde, and stressed that the US was keen to get a trade deal done with the UK this year. Earlier in the week, US president Donald Trump said in a speech at Davos he was looking forward to “negotiating a tremendous new deal with the United Kingdom” after Brexit.