European leaders are not likely to compromise on a budget this year causing more turbulence in the global economy, experts warn.
Two days of talks saw European leaders in a deadlock over the EU's 2014-2020 budget. A decision could come towards the second quarter of the next year, Chris Weafer, chief strategist at Uralsib bank warns, and economies across the world would feel the negative impact.
“Now the Eurozone is in a relatively mild recession. If we didn’t get agreement on the budget and we were to go all the way, then you are looking at several percentage points further into recession in Europe during 2013. And that’s of course there will be a contagion, and not the least of which will hit commodity producers such as Russia,” Chris Weafer told RT.
If the battle runs into next year it might coincide with February discussions over the US budget in Congress. Chris Weafer believes it will boost uncertainty.
“There has been a lot of focus on the so-called ‘fiscal cliff’ towards the end of the year, but come early February and the White House is going to have to submit its budget to the congress and that is going to open the whole new world of pain in terms of disagreements and argument between the two branches of government,” he says. “So we are going to be looking at this parallel in Europe and the US about budget uncertainty, a lot of uncertainty about where both economies are going. And there is no doubt emerging markets countries like Russia will definitely be in for collateral damage.”
Read On: No agreement on EU budget will lead to 'much deeper recession' — RT
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