+ A
A -
dpa
London
Britain could face a recession sparked by a fall in investment, trade chaos and a plunging currency if it leaves the European Union without an exit deal on October 31, the government’s financial watchdog warned on Thursday.
The Office for Budget Responsibility said it used fiscal stress tests to examine the impact on public finances of a less disruptive “no-deal, no-transition Brexit scenario” developed by the International Monetary Fund.
The OBR said that in a no-deal scenario, “heightened uncertainty and declining confidence deter investment, while higher trade barriers with the EU weigh on exports.” “Together, these push the economy into recession, with asset prices and the pound falling sharply,” it said a fiscal risks report, adding that it expected Britain’s real gross domestic product to fall by 2 per cent by the end of 2020.
“Higher trade barriers also slow growth in potential productivity, while lower net inward migration reduces labour force growth,” the report said.
The imposition of post-Brexit trade tariffs and the falling British pound would also push up inflation and “squeeze real household incomes,” it said.
Boris Johnson, the frontrunner to succeed Prime Minister Thersa May when the ruling Conservative party announces the result of its leadership run-off on Tuesday, has vowed to withdraw Britain from the EU by the delayed exit date of October 31 with or without a deal.
London
Britain could face a recession sparked by a fall in investment, trade chaos and a plunging currency if it leaves the European Union without an exit deal on October 31, the government’s financial watchdog warned on Thursday.
The Office for Budget Responsibility said it used fiscal stress tests to examine the impact on public finances of a less disruptive “no-deal, no-transition Brexit scenario” developed by the International Monetary Fund.
The OBR said that in a no-deal scenario, “heightened uncertainty and declining confidence deter investment, while higher trade barriers with the EU weigh on exports.” “Together, these push the economy into recession, with asset prices and the pound falling sharply,” it said a fiscal risks report, adding that it expected Britain’s real gross domestic product to fall by 2 per cent by the end of 2020.
“Higher trade barriers also slow growth in potential productivity, while lower net inward migration reduces labour force growth,” the report said.
The imposition of post-Brexit trade tariffs and the falling British pound would also push up inflation and “squeeze real household incomes,” it said.
Boris Johnson, the frontrunner to succeed Prime Minister Thersa May when the ruling Conservative party announces the result of its leadership run-off on Tuesday, has vowed to withdraw Britain from the EU by the delayed exit date of October 31 with or without a deal.
