Good morning, and welcome to our rolling coverage of the world economy, the financial crisis, the eurozone and business.
A new healthcheck on Britain’s economy is expected to warn today that a no-deal Brexit would plunge the country into recession.
The Office for Budget Responsibility (the fiscal watchdog) will outline how the UK economy would suffer if Britain fell out of the EU without a deal.
Under the OBR’s no-deal scenario, the UK economy would contract in 2020, and end up 3% smaller in five years time.
The warning will come in the OBR’s new Fiscal Risks Report for 2019, released today. This is a serious, weighty report, looking at the strength and weaknesses of the UK public finances, and the threats which could undermine them in the future.
It will include a fiscal ‘stress test’, measuring if the UK is really prepared to handle a wide range of topics including: macroeconomic and financial sector risks, specific revenue and spending risks, and balance sheet risks.
The report is due at 9.30am, but The Times has already had a sniff of it. It reports:
Britain will slip into recession next year and the economy will be 3 per cent smaller if there is a no-deal Brexit, the UK’s official economic forecaster is expected to say today.
The Office for Budget Responsibility is due to give its first assessment of the economic impact of a no-deal Brexit, including how it may affect household incomes, wages, employment and house prices.
The five-year forecast predicts that the economy will contract in 2020 as the UK officially enters into a recession, The Times understands. The economy is forecast to recover the following year, but GDP is still likely to be at least 3 per cent lower under a no-deal than if the UK leaves the EU with a deal.
The warning is well timed, with the two contenders to replace Theresa May both insisting that they would take the UK out without a deal if they become prime minister.
Boris Johnson even waved an Isle of Man kipper at Tory members last night, in an odd attack on the burden which the European Union places on producers [But….the Isle of Man isn’t in the EU, but is following its food rules so it can trade, just like the UK would have to….]
With the pound already wallowing at a 27-month low this week, Brexit concerns are mounting.
We’ll have full coverage of the OBR’s report from 9.30am.
Also coming up today
UK consumers have kept the economy motoring along since the Brexit vote. New netail sales figures will show whether people are cutting back, or still spending thanks to rising wages.
Economists predict a small drop in spending compared to May. A larger decline might intensify concerns about a recession.
- 9.30am BST: OBR publishes UK Fiscal Risks Report 2019
- 9.30am BST: UK retail sales for June (expected to drop by 0.3%, including fuel).
- 1.30pm BST: US weekly jobless figures