No-deal Brexit risks two-year recession in UK, claims IMF

credit;SWNS

As the UK struggles to determine anything regarding Brexit a stark warning had been handed towards the Uk.

In the case of the no-deal Brexit the UK would slump right 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 percent and 0.8 percent in the first and second years

The total negative effect of the no-deal Brexit to UK GDP would be 3.5 percent by 2021 when compared to current projection.

It stressed that “a no-deal Brexit that severely disrupts supply chains and raises trade costs may potentially have large and long-lasting negative impacts around the economies of the Uk and the European Union”.

Gita Gopinath, the IMF's chief economist, said: “While the worldwide economy keeps growing in a reasonable rate and a global recession is not within the baseline projections, there are many downside risks. Tensions in trade policy could break out again and engage in in other locations, like 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 within an environment of large private and public sector debt in lots of countries, including sovereign-bank doom loop risks.”

The world economy will grow 3.3 % this year, down from the 3.5 percent the IMF had forecast for 2021 in January.