Brexit adding to uncertainty and eurozone dynamics says ECB president Draghi

Brexit is a major uncertainty overhanging the eurozone economy, European Central Bank ECB President Mario Draghi said on Thursday, adding that he was "still hopeful" that major disruptions such as breaks in value chains could be averted. More than a week after the United Kingdom was originally supposed to have left the EU, Prime Minister Theresa May is seeking a further delay, from April 12 to June 30.

As she battles to get a divorce deal ratified by a divided British parliament, it remains unclear how, when or even if Brexit will happen. "I think the consequences of Brexit are different whether it is a hard disorderly Brexit or whether it is properly managed with an adequate transition period," Draghi said. "They are having votes every day (in the British parliament) so it would not be right to anticipate one thing or another.

"What is clear, however - the whole discussion on Brexit, which has lasted now many years, really, is part and parcel of the overall uncertainty that is hanging over our continent and I think is hanging over the UK as well." The ECB and the Bank of England have so-called "swap lines" in place to offer each other's currencies in banks in their respective jurisdictions if money markets freeze up.

While the relatively large size of the eurozone economy should limit the impact of Britain's break away from the EU, Draghi noted that some members are heavily exposed to the British economy, which could have serious consequences for them and "reverberate around the rest of the continent". He also warned that a break in value chains between Britain and the continent would have "lots of local and possibly serious effects". "But again I am still hopeful," Draghi said.