A ‘no-deal’ Brexit on World Trade Organisation terms would entail ‘substantial costs’ for the UK economy, the International Monetary Fund (IMF) has cautioned. Foreseeing a ‘daunting’ challenge in getting a deal done, it said all likely scenarios for Brexit would have some associated costs, but a disorderly departure could lead to ‘a significantly worse’ outcome.
The British economy is expected to grow by 1.5 per cent in both 2018 and 2019 if a broad Brexit agreement is struck, the agency said in its latest annual assessment of the UK economy.
“Any deal will not be as good as the smooth process under which goods, services, people and capital move around between the EU and the UK without impediments and obstacles,” IMF managing director Christine Lagarde told a news conference at London recently.
The IMF warning comes after British Prime Minister Theresa May’s recent statement that members of parliament must choose between her proposed deal with the European Union or no deal at all.
A ‘disorderly’ or ‘crash’ exit from the EU would have a series of consequences, including reduced growth, an increased deficit and depreciation of sterling, causing the UK economy to contract, said Lagarde.
A no-deal outcome would affect other EU economies ‘to a lesser extent’, IMF added.