Frankfurt/Paris/Vienna — European Central Bank (ECB) officials stepped up the urgency of their warnings that Britain’s messy divorce from the EU could further damage the currency area’s slowing economy. Speaking a day after the UK parliament rejected the government’s Brexit deal in a landslide, Austria’s Ewald Nowotny said uncertainty over the way forward could hurt sentiment in the eurozone. In a newspaper interview, executive board member Yves Mersch called the UK’s departure a potential source of “unnecessary shocks”.

“Brexit — from the banking point of view — is not so much a technical problem, because here we are pretty well prepared for whatever outcome there will be,” Nowotny told a conference in Vienna. “But it could be a psychological problem. And as you know, 50% of economic thinking is psychology.” Until now, ECB officials have said they were confident that Brexit will have minimal consequences beyond the financial sector and pose little immediate risk for the econo...

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