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UK recession WARNING: No deal Brexit could spark financial CHAOS – Europe will also suffer


The IMF is predicting Britain will fall into a two-year recession and lose 3.5 percent of its gross domestic product (GDP) should it leave the EU in a no deal scenario. The rest of Europe would also be dented, the IMF warned, with the eurozone economy forecast to lost 0.5 percent of GDP should Britain depart without a deal. The IMF said: “More generally, a no deal Brexit that severely disrupts supply chains and raises trade costs could potentially have large and long-lasting negative impacts on the economies of the United Kingdom and the European Union.” Last October, the global lender downgraded UK GDP growth from 1.5 percent to 1.2 percent for 2019.

For 2020, the UK GDP growth expectations were marked down from 1.5 percent to 1.4 percent.

The current forecast is on the condition of Britain leaving the EU with a deal.

Should this not be the case, the long-term effects of no deal could see higher tariffs and non-tariff barriers significantly reduce the returns to capital in the UK, according to the IMF.

The IMF said: “Consequently, firms’ desired capital stock falls, reducing potential output in the long term.

“The impact, not surprisingly, is much larger in the United Kingdom.

“Second, stricter immigration policies reduce the size of the labour force in the United Kingdom and expand the size of the labour force in the European Union.

“In combination, these effects lower UK potential output by almost 3 percent in the long term, relative to the current baseline.

“In the case of the European Union, the decline in potential output is about 0.3 percent.”

Brexiteers have in the past taken aim at the IMF and accused the international organisation of scaremongering over financial chaos being caused by Britain leaving the EU.

The UK economy was boosted earlier today by better-than-expected growth numbers, released by the Office for National Statistics.

GDP for the UK grew by 0.2 percent in February compared with January.

Analysts at Reuters had been expecting zero percent growth for February.

Over the three months to February, gross domestic product rose by 0.3 percent compared with the previous quarter, the ONS said.

Previous forecasts had anticipated 0.2 percent growth for the three-month period.

The IMF recently slashed its forecast for economic growth in Britain this year to 1.2 percent, down from a prediction of 1.5 percent made three months ago.

In 2020, GDP is expected to grow 1.4 percent.

Today will see Theresa May ask leaders of the 27 remaining EU nations to grant her an extension of Article 50 to June 30.

But speaking last night on the eve of a crunch summit in Brussels, European Council president Donald Tusk appeared to dash Mrs May’s hope for a shorter delay, and instead suggested that EU leaders grant the UK a longer extension of up to one year.



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