Societe Generale's Paris Headquarters
Societe Generale’s chairman has warned that a hard Brexit could plunge the world into recession and would be a disaster for the financial system, reported Bloomberg.
Lorenzo Bini Smaghi, Societe Generale’s Chairman, said, “This uncertainty, I think, would create quite an impact on the emotion, on the sentiment, on entrepreneurs all over the world, consumption will stop, investment will stop, and we can have also a recession.”
UK Prime Minister Boris Johnson struck a defiant tone at the weekend, saying that the country will leave the European Union as planned on 31 October 2019, regardless of whether the EU accepts his latest proposal.
For their part, French President Emmanuel Macron and Irish Prime Minister Leo Varadkar both signalled they want progress, adding to a sense that time is running out for the two sides to come together.
“For the financial sector, it is a big risk because if we do not have continuity, for the financial system it is a disaster, an agreed Brexit would have an equivalence concept that would at least allow for a transition,” said Bini Smaghi.
“If we had a hard Brexit, then it is a problem because the continuity of contracts, the continuity of business will be put into question,” added Bini Smaghi.
Bini Smaghi compared the potential disruption with the effect of the Lehman Brothers collapse in 2008.