Lew Sees ‘Negative’ Global Economic Impact If U.K. Exits EU

Treasury Secretary Lew Speech On Economic Sanctions

Jacob Lew, U.S. Treasury secretary.

Photographer: Andrew Harrer/Bloomberg
  • Treasury chief says Brexit also geopolitically destabilizing
  • He plays down the impact of weak U.S. payrolls report for May

U.S. Treasury Secretary Jacob J. Lew warned that the global economy would be damaged if the U.K. votes to leave the European Union on June 23.

“It’s in the best interest of Europe, the U.K. and the global economy and for geopolitical stability for the U.K. to stay in,” Lew said in an interview to be broadcast Sunday on CNN’s “Fareed Zakaria GPS,” according to a transcript provided by the network. “I only see negative economic outcomes if the vote goes the other way.”

Lew added his voice to a chorus of leaders from within the EU about the risks of pulling out of the European union. Financial markets have been whipsawed in recent days as investors grapple with the possibility of a British exit from the European Union. Sterling fell for a second week in a row as opinion polls suggested the vote is too close to call; the latest Opinium poll conducted for the Observer newspaper and released Saturday had 44 percent of respondents wanting to remain in the EU and 42 percent wanting to leave.

In the U.K., groups from homebuilders to Cornish pasty makers have weighed in on what Brexit may mean to their businesses.

Lew repeated President Barack Obama’s assertion that the U.K. would have to wait for the U.S. to strike a trade deal with the E.U. before getting one of its own should voters opt out of the union. “That wouldn’t be good for the U.K.,” Lew said.

It’s “profoundly in the economic and security interests of both the U.K., Europe and the world, for the U.K. to remain in,” the Treasury secretary said in the interview, which was taped on Friday. But “it’s obviously a decision for the voters of the U.K. to make,” he added.

‘Sustained Growth’

Lew was more upbeat about the prospects for the U.S. economy, in spite of the weaker-than-expected jobs report for May.

“We’re still in a stable and sustained period of growth,” he said, cautioning against reading too much into one month’s numbers. A number of Federal Reserve officials have sounded the same note about a report that contrasted with other, less downbeat readings on the economy.

The Labor Department said on June 3 that employers added 38,000 workers to payrolls in May, the fewest since September 2010. The increase was below the most pessimistic forecast in a Bloomberg survey and followed average monthly gains of 229,000 last year.

To back up his optimism on the economy, Lew pointed to strong consumer demand for cars and other durable goods, and an improving housing market.

Consumer spending climbed in April by the most in almost seven years as purchases of durable goods jumped 2.2 percent, the Commerce Department reported on May 31.

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