Official have responded to comments of the two British candidates for PM comments on no-deal Brexit with Michel Barnier, EU’s chief Brexit negotiator saying he was unimpressed by threats of no-deal Brexit and that the Withdrawal Agreement "is the only way to leave the EU in an orderly manner". The UK would have to face the consequences of a no-deal EU exit. EU Commission’s vice-president, Frans Timmermans said that UK ministers were "running around like idiots" when they arrived to negotiate Brexit in 2017. The new EC president, von der Leyen on the other hand said she was willing to grant more time to the UK. Meanwhile, Britain’s fiscal watchdog has assessed that the economy will fall into a recession losing 3% next year in the event of a "no-deal" Brexit. In April, the IMF warned that Britain would suffer economic damage equivalent to the loss of at least 2-3 years of normal growth between now and 2020 if it leaves the EU without a deal adding that even with no delays at borders and minimal financial market turmoil — the economy would grow 3.5% less than it would under a smoother Brexit.
China’s debt has topped 300% of GDP according to the Institute of International Finance (IIF). Beijing is trying to contain financial risks while announcing boosting packages for its slowing economic growth going through its weakest pace in at least 27 years as demand at home and abroad faltered in the face of mounting U.S. trade pressure. Beijing has been encouraging banks to lend more particularly to struggling smaller firms to revive investments and lower unemployment spending billions of dollars in tax cuts and infrastructure. Chinese officials have said repeatedly that the debt risk is overall manageable.
The U.S. dollar was overvalued by 6% to 12%, based on near-term economic fundamentals analysed by the IMF while the euro, the Japanese yen and China’s yuan were considered in line with fundamentals. The IMF has criticised the US for using tariffs to resolve trade imbalances but its assessment that the dollar is overvalued will not be welcomed by President Trump considering his frequent complaints that dollar strength is hampering U.S. exports. Trump has railed against European and Chinese policies for what he calls a devaluation of the euro and other currencies against the dollar. Chief Economist Gita Gopinath Gopinath added he U.S.-China trade war could cost the global economy about $455 billion next year and that the Fund estimates that the tariffs applied in the U.S.-China trade war could lower global economic growth by 0.5% in 2020. Countries with deficits, like the United States and Britain, should back spending in a growth-friendly manner while, Germany, the Netherlands Korea and others enjoying a trade surplus should boost increase infrastructure investment and discourage excessive saving.
Japan is considering taking a dispute with South Korea over its compensation for wartime forced labourers to the International Court of Justice. The question of compensation for South Koreans during Japan’s 1910-45 occupation of the Korean peninsula has soured relations when Japan restricted exports of high-tech material to South Korea. The case cannot go to trial without agreement from South Korea which has also rejected third-party arbitration. Japanese manufacturers’ business confidence hit a three-year low in July, highlighting the fragility of the export-led economy as external demand weakens.