UK to face inflation, recession after Brexit: EU Bank official

The United Kingdom will face inflation and plunge into recession after the vote to leave the European Parliament, says a member of the European Central Bank Governing Council.

“In the short term, there is a difficult challenge for the British economic and monetary policy between two contradictory challenges,” Francois Villeroy de Galhau said at a business conference in Aix-en-Provence, France, on Sunday.

“There is the challenge of inflation, with the effects on inflation of the fall of the pound, which is down 11 percent since Brexit,” he explained.

“”And then there is recession challenge with the tendency to see less growth due to the uncertainty impact on investments. And it is always very complicated for monetary and economic policy to be caught in this dilemma,” he continued.

In the June 23 referendum, some 52 percent (17.4 million) of British voters chose to leave the EU, while roughly 48 (16.14 million) percent of people voted to stay in the union.

The UK has faced severe problems after the vote, with Sterling plunging to a 31-year low against the US dollar, while stock markets have slipped.

Two top credit ratings agencies have downgraded the UK’s rating and a number of major companies, among them telecom giant Vodafone and commercial airliner easyJet, have also raised the prospect of moving their headquarters out of Britain.

Brexit has also caused political turmoil in the country. Prime Minister David Cameron announced his resignation hours after the vote and left exit negotiations to his successor, who is expected to be appointed before the Conservative Party’s conference in October.

According to an Opinium survey released on Thursday, some of those who voted for Brexit regret their choice now with at least 7 percent (1.2 million) saying they would vote for Remain if they get another chance.