A no-deal BREXIT will be a large negative shock to the UK economy

Uncertainty over government policies is hitting the outlook for Britain. A no-deal BREXIT would generate a large negative shock to the UK economy. Substantial uncertainty persists about the timing and nature of the withdrawal of the United Kingdom from the European Union. Particularly as concerns a possible no-deal exit which could push the UK into recession in 2020 and lead to sectoral disruptions in Europe.

Other risks – including the overall slowdown in the Chinese economy and significant financial market vulnerabilities from the tension between slowing growth, high debt and deteriorating credit quality – are also weighing on future growth.

UK Economy

The OECD forecast British growth of 1% in 2019 and 0.9% in 2020. The OECD had forecast in May growth of 1.2% and 1.0%.

If Britain leaves without a deal, UK economy will be 2% lower than otherwise in 2020-2021 even if its exit is relatively smooth with fully operational infrastructure in place, the OECD said. This forecast will only change if Britain leave the EU smoothly with a transition period.

At the same time, Eurozone growth was seen at 1.0% – down from 1.2% in May – this year and 1.0% in 2020 – down from 1.4% in May.

OECD oulook 2019

Ireland

Ireland will suffer the biggest negative shock from a no-deal Brexit outside the UK, the Organisation for Economic Co-operation and Development (OECD) has warned.

The OECD suggests that even with a relatively smooth adjustment, Irish economic growth will be cut by 1.5 per cent in 2020 and 2021, compared with 2 per cent in the UK itself.

Invest to avoid a low-growth future!
Laurence Boone

Global Growth

The global economy has become increasingly fragile and uncertain. Global growth is slowing and downside risks continuing to mount, according to the OECD’s latest Interim Economic Outlook.

Is Eurozone ready if economy gets worse?

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