UK economy stands to lose 3.5% of GDP in no-deal Brexit, IMF says

The International Monetary Fund said that the UK economy could lose 3.5% of GDP if it leaves the EU without a deal.

Britain will see its economy lose the equivalent of up to three years of normal GDP growth if it leaves the EU without a deal, the International Monetary Fund (IMF) warned on Tuesday.

The IMF said that even in the event of a relatively orderly no-deal Brexit, would still grow 3.5% less by the end of 2021 compared to if the UK was able to secure a deal.

‘The increase in trade barriers has an immediate negative impact on UK foreign and domestic demand,’ the IMF said.

No-deal Brexit bad news for the EU economy too

Britain is still set to leave the bloc on Friday (April 12) unless the UK Prime Minister Theresa May can agree an extension to Article 50 with EU leaders in Brussels on Wednesday.

Officials in Brussels are expected to grant an extension, with the IMF warning EU leaders that their economies will also suffer if Britain bails out of the bloc without a deal in place.

In fact, the EU economy is forecast to lose 0.5% of its GDP in a no-deal scenario, the IMF said.

IMF downgrades UK economic growth forecast

The IMF downgraded its forecast for economic growth in the UK for 201 to 1.2%, down from 1.5% three months ago – the weakest GDP estimate the country has had in the last 10 years.

‘The downward revisions ... reflect the negative effect of prolonged uncertainty about the Brexit outcome, only partially offset by the positive impact from fiscal stimulus announced in the 2019 budget,’ the IMF said.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

European Central Bank meeting

Learn about how the ECB meeting affects interest rates and price stability ahead of the next announcement on 24 October 2019.

  • How might the next meeting affect the markets?
  • What are the key rate decisions to watch?
  • Why is the Governing Council announcement important for traders?

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.