The U.K.’s exit from the European Union poses the biggest risk to the region’s economy as the prospect of an extended breakup process raises uncertainty, according to a forecast prepared for the German government. Germany and the rest of the EU could suffer economically if negotiations over the terms of Britain’s departure from the 28-member bloc drag on, five economic institutes said in their fall outlook presented on Thursday. Brexit outweighs troubled banking sectors in Italy and Portugal as well as conflicts in the eastern Mediterranean region as a risk factor, they said. “The U.K. and to a lesser extent the rest of the European Union could face a lengthy phase of investment restraint,” Stefan Ederer of the Austrian Institute of Economic Research, one of the report’s authors, told a news conference in Berlin.
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