Posted by AdviserDirect on 08/02/2019

How bad would a no-deal Brexit be for the economy?

How bad would a no-deal Brexit be for the economy?

Most economists think a hard Brexit would prove a significant drag on growth in the long term, but forecasting the short-term picture proves more difficult. 

year ago, when no-deal Brexit seemed a more distant prospect, I wrote that if it became the central scenario we’d witness a further large drop in the exchange rate, falls in business and consumer confidence, and some relocation of business activity from the UK to EU member states in anticipation of possible disruption to supply chains. 

And so it has proved. Sterling is down by about 7 per cent over the last three months, and there is mounting evidence that many businesses are putting major investments on hold. While this has been slow to translate into hard economic data – particularly because consumer spending has remained relatively resilient – the UK economy is more likely than not to have shrunk in the second quarte.

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