15 | SEP | 2019
UK hit with recession warning as no-deal Brexit looms
A British Pound Sterling note is seen - Illustration:Thomas White/REUTERS

UK hit with recession warning as no-deal Brexit looms

18/07/2019
16:05
Reuters
London
David Milliken & Kylie MacLellan
-A +A
Despite previous warnings of the damage that a no-deal Brexit could do to the economy, both contenders to become prime minister next week say they would leave the European Union without a transition agreement to soften the shock

Britain might be entering a full-blown recession that a no-deal exit from the European Union would compound, blowing a GBP £30 billion hole in the public finances, a budget watchdog said on Thursday.

As lawmakers prepared for a vote that could hinder any attempt by the next prime minister to pursue a no-deal Brexit, the Office for Budget Responsibility said the economy probably flat-lined or might have contracted in the second quarter.

Some of that weakness may have been payback after a rush to build up inventories before the original Brexit deadline in March.
 

Artículo

Can Mexico and other emerging countries compensate the loss of the European market for the UK?

Since the Vote Leave campaign in 2015, the British public has been told that the eventual loss of unrestricted access to the European market can be compensated by new free trade deals with emerging economies
Can Mexico and other emerging countries compensate the loss of the European market for the UK?Can Mexico and other emerging countries compensate the loss of the European market for the UK?

“But surveys were particularly weak in June, suggesting that the pace of growth is likely to remain weak,” the OBR said it said in a report on the outlook for the public finance.

“This raises the risk that the economy may be entering a full-blown recession.”

Britain’s economy slowed by less than feared after the 2016 Brexit referendum. But many investors are worried about a sharp downturn now with the latest Brexit deadline approaching on October 31 and the world economy slowing because of trade tensions.

A no-deal Brexit could cause the economy to contract by 2% by the end of 2020, the OBR said, referring to International Monetary Fund forecasts.

It could also add GBP £30 billion (USD$37.4 billion) a year to public borrowing by the 2020/2021 financial year, the OBR said, more than doubling the expected deficit.

The EU’s chief Brexit negotiator, Michel Barnier, said in an interview to be published on Thursday that he was unimpressed by threats of no-deal Brexit, but that if the United Kingdom opted for such a course it would have to face the consequences.

Despite previous warnings of the damage that a no-deal Brexit could do to the economy, both contenders to become prime minister next week say they would leave the European Union without a transition agreement to soften the shock, if necessary.

With a majority of Britain’s lawmakers opposed to a disorderly exit, some have questioned whether Boris Johnson, favored to replace Theresa May, would suspend parliament in order to deliver Brexit by the next deadline.
 

Artículo

UK Prime Minister Theresa May announces her resignation

May said she would stand down on June 7, acknowledging that the support of her Conservative lawmakers had disappeared after her failure to deliver on Britain’s 2016 vote to leave the European Union
UK Prime Minister Theresa May announces her resignationUK Prime Minister Theresa May announces her resignation

Sky News said on Tuesday that Johnson was considering holding the Queen’s Speech, in which the prime minister lays out a policy program, in November. That means lawmakers would be sent home two weeks earlier, hampering their ability to stop Britain’s leaving the European Union without a deal on October 31.

British lawmakers were due to vote on Thursday on a beefed-up proposal aimed at making it harder for either Johnson or his rival Jeremy Hunt to force through a no-deal Brexit by suspending parliament.

Concerns about a no-deal Brexit, which have weighed heavily on the value of sterling, have mounted as the leadership contest has progressed. The OBR said promises by the candidates of higher spending and tax cuts would also put a strain on Britain’s finances.
 

Artículo

The Brexiteers: They promised glory, yet the United Kingdom is facing a chaotic divorce

They promised a “Global Britain,” a brave new world where the United Kingdom would recover its sovereignty from the bureaucrats of Brussels and apply its own laws on trade, immigration, and justice
The Brexiteers: They promised glory, yet the United Kingdom is facing a chaotic divorceThe Brexiteers: They promised glory, yet the United Kingdom is facing a chaotic divorce

“The spending control framework seems to be under pressure, with major announcements being made outside fiscal events, and the Conservative leadership making pledges that would prove expensive if pursued,” it said.

Finance minister Philip Hammond, who supported Remain in the 2016 Brexit referendum, used the report to renew his criticisms of supporters of a no-deal Brexit.

“I greatly fear the impact on our economy and our public finances of the kind of no-deal Brexit that is realistically being discussed now,” he said on the sidelines of a Group of Seven finance ministers meeting in France.

sg

Mantente al día con el boletín de El Universal