EUROPE’S economy is now hitting its stride, the International Monetary Fund (IMF) said yesterday, but a disruptive Brexit could result in “appreciably” lower growth for both Britain and the eurozone.

The IMF’s latest Regional Economic Outlook, which looks at more than 40 countries from Germany and Britain to Turkey and Russia, said the current recovery looks increasingly assured.

It is partly driven by central bank stimulus and low interest rates, but also by improving fundamentals, as evidenced by a pickup in investment across a broad range of economies.

“This recovery looks increasingly durable,” the deputy director of the IMF’s European Department, Joerg Decressin, said at a presentation of the report published yesterday.

“Growth in the euro area has been positive for 18 quarters, lately around 2.5 percent. Many countries in eastern Europe have seen growth around or above 3 percent for some time already. So this recovery has not only become broader but also stronger.”

The IMF’s World Economic Outlook, published at September meetings in Washington, forecasts region-wide growth of 2.4 percent this year and 2.1 percent next year, but much has shifted in the background since then.

Decressin said it supported the European Central Bank’s careful approach to cutting its stimulus. He also said inflation justified the Bank of England’s raising its interest rates for the first time since the financial crisis.

The main uncertainty on the horizon remains Brexit and what kind of trade relationship Britain can set up when it leaves the European Union with the 27 remaining countries.

Decressin said the IMF’s expectation remained that a deal with a transition period would be struck. Its economists have not run any “no deal” forecasts, he said, but a “disruptive” Brexit is likely to have a damaging impact. (SD-Agencies)