If Britain leaves without a deal this quarter, gross domestic product could be 1.4 percent lower in the first year when compared with a base-case scenario where an agreement is secured, the IMF said Tuesday.
The hit rises to 3.5 percent by 2021, based on the gap between the scenario and current trend growth. A more chaotic exit, with heightened border disruptions and a greater tightening of financial conditions, could have a more severe impact, the study found.
The warning shows what’s at stake as Prime Minister Theresa May prepares to make her case for a Brexit extension to European leaders in Brussels on Wednesday. Bank of England Governor Mark Carney, who has regularly warned of the danger of a disorderly Brexit, said last week the risk is now “alarmingly high.”
The scenarios were contained in the IMF’s latest World Economic Outlook, where the prediction for U.K. economic growth this year was cut to 1.2 percent from 1.5 percent. [...]
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