Ignazio Visco, governor of Italy’s Central Bank, has warned that a no-deal Brexit could have severe implication on the overall European economy, though the possible impact on international trade remains nominal.

Visco, also a council member of the European Central Bank, said that any financial markets abnormalities could have heavy adverse effects on all countries related to the issue, which is being looked closely. In a speech addressing the Annual Forex Conference in Rome, Visco further stated that the prospects for the Italian economy are less favorable as compared to the preceding year. The growth in Europe will become much weaker than initially anticipated, Visco added along with his other European counterparts.

The warning comes after his country fell into recession technically, after its GDP plunged for a second consecutive quarter at the end of 2018, a third time in a decade. On Thursday, Italian Prime Minister declared his country’s falling in recession after the economy shrunk by 0.2%. This has raised speculations that the Mediterranean country may need further budget measures for the coming year. Visco claimed that The Bank of Italy’s projection of growth at 0.6% for the current year is in line with the leading domestic and international projections, but with significant risks on the downside.

In the World Economic Forum (WEF) in Davos last month, however, Italy’s Economy Minister, Giovanni Tria, stated that Italy would meet its key budget deficit target for the current year and that there was no need for any rectification measures. The Italian government has targeted a GDP growth of 1% for the current year. On the contrary, industry lobby Confindustria pointed out on Friday that Italy’s economic growth will be slightly above zero.

On Friday, reports surfaced that political expert Camilla Tominey advised the European Union to review its refusal stand to renegotiate the term of Brexit withdrawal deal to secure an agreement with Britain. Amid growing economic turbulence among member nations, the European Union has continued to amend their position on the controversial inclusion of Irish Backstop in the Brexit withdrawal agreement. Tominey said that the EU is shooting itself in the foot by not agreeing to the demands of Theresa May, which has put them at risk of losing trade opportunities with the United Kingdom.

Germany, the leading contributor to the EU Economy at over 21%, recorded a 0.3% fall in GDP for December quarter of 2018. This is the slowest growth rate Germany has had in the last five years. Tominey also quoted a report by Ifo Institute for Economic Research, a Munich based institute, which also suggested that the European Union should be more flexible for renegotiations on the Brexit withdrawal agreement.

Last month at WEF Davos, International Monetary Fund (IMF) warned that no-deal Brexit, along with Chinese economic slump, is the two biggest risk to the global economic growth in 2019. The IMF has projected Global GDP growth of 3.7% for the year 2019, 0.2% weaker than the 2018 projection. The worrying fact for the EU is that the GDP projections of many of its member countries are way below the global projection.

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