Finance leaders of the Group of Seven industrial powers united over the weekend in wishing that Britain stays in the European Union, but acknowledged they could do little more than hope.
“The G7 did not talk about a Plan B to respond to what would happen if Britain left the European Union,” French Finance Minister Michel Sapin told Reuters yesterday. “We talked about ways to help Britain stay in the EU.”
Britain’s momentous referendum on whether to stay in the EU has been a prime issue for global markets and policymakers, who can largely only wait and see what Britons will say at the polls on June 23.
The ups and downs of polling data have swayed financial markets for months. Concern over the looming vote is a major risk for the Federal Reserve, which has indicated it may raise US interest rates at its mid-June meeting but expressed concern about a “Brexit.”
Sapin did not elaborate on any steps the G7 discussed to keep Britain in the EU, during an interview on the sidelines of their meeting of finance ministers and central bankers in Sendai, northeast Japan.
“A Brexit would have heavy consequences,” Sapin said. “It would be bad for Britain and bad for Europe, because investors would have doubts and this would affect capital flows.”
But G7 ministers were able to do little but rally around Prime Minister David Cameron’s call for the EU’s second-largest economy to remain in the union.
“We clearly are concerned, collectively, at the risk of Brexit and do believe that could potentially have some economic impacts,” Canadian Finance Minister Bill Morneau told Reuters in Sendai. But he added, “We haven’t spoken of specific measures that might be taken in that regard.”
German Finance Minister Wolfgang Schaeuble said the G7 members “agreed that (a Brexit) would be the wrong decision.”
Cameron’s aggressive campaign to woo a eurosceptic public to vote “In” appears to be working for now. The pound this week touched its highest level against the euro in three and a half months as polls showed EU support strong and rising.
An Ipsos-MORI poll on Friday found 55% favoured remaining in the EU versus 37% wanting “Out.”
Economic arguments appear to be having some pull on the British public as “In” proponents argue a Brexit would cause financial market turmoil and hurt the $2.9tn UK economy.
A vote to leave would hammer British house prices by 10-18%, sending mortgage rates higher and hurting Britons trying to get onto the property ladder, finance minister George Osborne told the BBC on Friday.
Still, the topic can be delicate for politicians from other countries, as their comments could be counterproductive if they are seen in Britain as meddling.
The G7’s Japanese host, Finance Minister Taro Aso, said on Friday that some of his counterparts supported a British exit – a remark quickly retracted by his staff.
“What the minister meant was that it would be good if Britain remained in the EU,” a Finance Ministry official said.
President Barack Obama stirred debate in April when he warned on a visit that Britain would be “in the back of the queue” for a trade deal with the US if it dropped out of the EU.
Obama’s Treasury Secretary Jack Lew, summarising the Sendai G7 meeting, did not mention a Brexit.
The European Commission has largely stayed out of the campaign.
“We have no Plan B for Brexit,” European Union Commissioner Pierre Moscovici told reporters in Sendai on Friday. “Our only plan is for Britain to remain in a united Europe.”