The European economy appears to have weathered the initial impact of the UK’s vote to leave the European Union reasonably well. However, the vote could yet have important indirect effects by fuelling euroscepticism elsewhere in the region and hence contributing to the already high levels of political uncertainty ahead of a series of key elections and votes in the coming quarters. Alongside several adverse economic forces – including rising inflation – these mounting political risks are likely to weigh on activity, with euro-zone GDP growth slowing from around 1.5% this year to a belowconsensus 1.0% or so in 2017.
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