The UK is currently scheduled to leave the European Union on October 31, 2019, after Theresa May managed to secure a deadline from the remaining EU member states. Securing a Brexit pushback meant Britain averted a default position of departing the bloc at 11pm tonight, April 12, without a deal in place. But despite the added time to thrash out the finer details of Britain’s exit, Mr Weber said the uncertainty continues to weigh down on the European economy. Mr Weber told CNBC: “This uncertainty is weighing down on European growth and it cannot be resolved by monetary or fiscal policy.”
The eurozone economy has also taken a battering over the last few months from weakness in Germany and Italy.
Germany, the largest economic powerhouse in Europe, has been dented in recent months by weaker demand for its exports, softer consumer spending and car sales being hit by new emissions standards.
While debt-ridden Italy has spent months wrangling with EU finance bosses over its controversial budget and deficit target.
The International Monetary Fund recently slashed its growth forecast for the 19-nation single currency area to 1.3 percent, down from the 1.8 percent expansion in 2018.
While the IMF also predicted the eurozone economy could lose 0.5 percent of gross domestic product (GDP) this year should a hard Brexit take place.
Mr Weber went on to suggest the governments across Europe are running out of hands to enhance the growth in the economy.
The European Central Bank only allows budget deficits of three percent of GDP, of which the majority of nations are already near the upper limit, Mr Weber explained.
He said: “We’re a bit skeptical about the ability of Europe to use stimulus to come out of this.
“I think there is some downside risk in Europe and you have to acknowledge that.
“So, whilst I do have the main outlook to be a sort of L-shaped recovery, stabilisation at a lower level, growth below potential, I don’t have the main scenario of a recession. ”
From a global aspect, the IMF recently cited Brexit uncertainty as part of its reason for downgraded its world growth forecast.
Marking its third downgrade since October, the global lender is forecasting the global economy to grow 3.3 percent this year, its slowest expansion since 2016.
The latest reading is down by 0.2 percent from a January outlook. The projected growth rate for 2020 was unchanged at 3.6 percent.
The new forecast is on the condition of Britain leaving with a deal, but Fund warned how exiting without measures in place could cut more than 0.2 percent points from global growth this year.