Here & Now‘s Jeremy Hobson speaks with former Treasury Secretary and Harvard University president Larry Summers about what “Brexit” might be mean for markets around the world and in the U.S., and whether we are at risk of a recession or other economic downturns.
Larry Summers explains why he’s concerned by the global financial reaction to ‘Brexit.’ “I think this adverse shock comes at a time when the global economy is brittle. I think also beyond its significance for the economy of the United Kingdom, which I think is likely to be fairly large, they’ll more likely than not, I would say, have at least a mild recession.”
“There’s a major psychological impact from the fact that people are going to become very uncertain about where Europe is going,” Summers adds. “They’re going to become more uncertain about what’s been a 70 year old project that’s been going since the second world war of increasing global integration. And in that context, I think we have got to be concerned that that’s going to discourage business investment, that that’s going to discourage hiring.”
Summers also notes how upcoming political elections in the United States and France could influence global markets. “That in a world that is so uncertain— there’s the US election this fall. There’s a German and French election next fall. Nobody knows quite what’s going to happen in terms of the politics of Britain.I think the tendency is going to be to freeze up and slow down on investment and retirement plans., and that then has a bit of a prospect of becoming a self-fulfilling negative prophecy.”
Guest
Larry Summers, president emeritus of Harvard University and former United States Secretary of the Treasury. He tweets @LHSummers.
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