Wednesday 21 August 2019

UK economy may already be on cusp of recession and no-deal Brexit will add extra annual £30bn debt

Boris Johnson (left) and Jeremy Hunt. Picture: Jeff Overs/BBC/PA
Boris Johnson (left) and Jeremy Hunt. Picture: Jeff Overs/BBC/PA
Donal O'Donovan

Donal O'Donovan

THE UK economy may already be on the cusp of recession and a no-deal Brexit will pile £30bn- a-year (€33bn) of new debt on top of that, the country’s own Office for Budget Responsibility (OBR) has warned.

While Boris Johnson and Jeremy Hunt have talked up their willingness to pursue a no-deal Brexit in October, Britain’s independent budget watchdog set out the potentially colossal costs on Thursday.

A no-deal Brexit would hurt confidence, deter investment, disrupt ports and lead to higher trade barriers with the European Union, the OBR said. That will hit the pound and causing the UK economy to contract by 2pc by the end of 2020, it said.

The resulting budget deficits could the add £30bn a year to public borrowing by the 2020/21 financial year, the OBR said.

Growth in the UK economy has already flat-lined and may be in contraction already, the UK’s independent fiscal watchdog said. Business spending has become erratic as firms try to second guess the possible date and impact of Brexit – which led to stock piling early in the year followed by a dip in orders.

“But surveys were particularly weak in June, suggesting that the pace of growth is likely to remain weak. This raises the risk that the economy may be entering a full-blown recession,” it said in a report on the outlook for the public finances.

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