As the UK struggles to decide anything regarding Brexit a stark warning had been handed to the British Isles.
In the case of a no-deal Brexit the UK would slump into a two-year recession, claims the IMF (the International Monetary Fund).
A no-deal outcome that led to severe border disruptions and a quick erection of tariffs would cause UK GDP to fall by 1.4 per cent and 0.8 per cent in the first and second years
The total negative effect of a no-deal Brexit to UK GDP would be 3.5 per cent by 2021 compared to the current projection.
It stressed that “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”.
Gita Gopinath, the IMF’s chief economist, said: “While the global economy continues to grow at a reasonable rate and a global recession is not in the baseline projections, there are many downside risks. Tensions in trade policy could flare up again and play out in other areas, such as the auto industry, with large disruptions to global supply chains.
“Growth in systemic economies such as the euro area and China may surprise on the downside, and the risks surrounding Brexit remain heightened. A deterioration in market sentiment could rapidly tighten financing conditions in an environment of large private and public sector debt in many countries, including sovereign-bank doom loop risks.”
The world economy will grow 3.3 percent this year, down from the 3.5 percent the IMF had forecast for 2019 in January.
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