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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.

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