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| No-deal Brexit would harm EU countries as well as UK, warns IMF | No-deal Brexit would harm EU countries as well as UK, warns IMF |
| (about 2 months later) | |
| Britain crashing out of the EU without a deal would inflict significant economic pain across Europe, leaving the region without any winners, the International Monetary Fund has warned. | Britain crashing out of the EU without a deal would inflict significant economic pain across Europe, leaving the region without any winners, the International Monetary Fund has warned. |
| As the new Brexit secretary, Dominic Raab warned Europe to prepare for a no-deal exit, the IMF said such an outcome would hurt the UK most but would also have damaging economic consequences for Ireland and other EU nations. | As the new Brexit secretary, Dominic Raab warned Europe to prepare for a no-deal exit, the IMF said such an outcome would hurt the UK most but would also have damaging economic consequences for Ireland and other EU nations. |
| Brexit: Raab and Barnier to meet as EU steps up no-deal warnings | Brexit: Raab and Barnier to meet as EU steps up no-deal warnings |
| In its annual health check for the euro area, the Washington-based fund said economic growth across the 27 remaining EU states would fall by as much as 1.5% by 2030, if Britain falls back on World Trade Organisation rules for its trading relationship with the EU after leaving next year. | In its annual health check for the euro area, the Washington-based fund said economic growth across the 27 remaining EU states would fall by as much as 1.5% by 2030, if Britain falls back on World Trade Organisation rules for its trading relationship with the EU after leaving next year. |
| While economic output for the UK would drop by more than twice that amount – wiping out almost 4% of GDP – Ireland would suffer by almost as much as a result of its strong ties to Britain and shared border. | While economic output for the UK would drop by more than twice that amount – wiping out almost 4% of GDP – Ireland would suffer by almost as much as a result of its strong ties to Britain and shared border. |
| The Netherlands, Denmark and Belgium, with similar close proximity and trading links, would also lose around 1% of GDP. | The Netherlands, Denmark and Belgium, with similar close proximity and trading links, would also lose around 1% of GDP. |
| Smaller nations with deep financial links to the City of London, such as Malta, Cyprus and Luxembourg, would also be negatively affected by a hard Brexit, the fund warned. | Smaller nations with deep financial links to the City of London, such as Malta, Cyprus and Luxembourg, would also be negatively affected by a hard Brexit, the fund warned. |
| The IMF said the long-run impact from a hard Brexit would be spread across the EU as a result of the economic and financial ties spanning the region, which have grown closer by about 40% over the past quarter century. The UK ranks among the EU’s three largest trading partners, accounting for 13% of trade in goods and services. There are also complex supply chain links between companies across the bloc. | The IMF said the long-run impact from a hard Brexit would be spread across the EU as a result of the economic and financial ties spanning the region, which have grown closer by about 40% over the past quarter century. The UK ranks among the EU’s three largest trading partners, accounting for 13% of trade in goods and services. There are also complex supply chain links between companies across the bloc. |
| The Fund warned that the lack of progress between Brussels and Westminster in Brexit talks has raised the risk of a disruptive exit. It said: “The strength of euro area-UK integration implies that there would be no Brexit winners.” | The Fund warned that the lack of progress between Brussels and Westminster in Brexit talks has raised the risk of a disruptive exit. It said: “The strength of euro area-UK integration implies that there would be no Brexit winners.” |
| Mahmood Pradhan, the deputy director for the European department at the IMF, said: “We are very concerned. It’s quite late in the process and we don’t see any clarity yet on the future relationship and we’re getting near some important deadlines.” | Mahmood Pradhan, the deputy director for the European department at the IMF, said: “We are very concerned. It’s quite late in the process and we don’t see any clarity yet on the future relationship and we’re getting near some important deadlines.” |
| While hopes remain for a deal by the time the EU Council meets in October ahead of the UK’s formal departure in March next year, ministers were preparing to release more than 70 documents setting out preparations businesses would need to make were the UK to leave without an agreement. The European commission also plans to release an advisory document to the EU27 on the consequences of a breakdown in talks. | While hopes remain for a deal by the time the EU Council meets in October ahead of the UK’s formal departure in March next year, ministers were preparing to release more than 70 documents setting out preparations businesses would need to make were the UK to leave without an agreement. The European commission also plans to release an advisory document to the EU27 on the consequences of a breakdown in talks. |
| The fund also warned that a free trade agreement between London and Brussels – the option preferred by Theresa May – would still have many negative consequences for both sides. | The fund also warned that a free trade agreement between London and Brussels – the option preferred by Theresa May – would still have many negative consequences for both sides. |
| Assuming the UK leaves the single market and the customs union, but strikes a broad free trade agreement, the IMF said GDP could drop by up to 0.5% across the EU. Britain and Ireland would again suffer losses above the average, at more than 2% of GDP. | Assuming the UK leaves the single market and the customs union, but strikes a broad free trade agreement, the IMF said GDP could drop by up to 0.5% across the EU. Britain and Ireland would again suffer losses above the average, at more than 2% of GDP. |
| The IMF said a “relatively benign” Brexit scenario, whereby Britain remained a member of the European Economic Area – similar to the arrangement for Norway – would cause “negligible” losses. | The IMF said a “relatively benign” Brexit scenario, whereby Britain remained a member of the European Economic Area – similar to the arrangement for Norway – would cause “negligible” losses. |
| This is not the first time the fund has intervened in Brexit. Ahead of the referendum two years ago, the IMF predicted that a vote to leave the EU would trigger a stock market crash and a recession in 2017, drawing angry reactions from Brexit campaigners who attacked its record on economic forecasting. | This is not the first time the fund has intervened in Brexit. Ahead of the referendum two years ago, the IMF predicted that a vote to leave the EU would trigger a stock market crash and a recession in 2017, drawing angry reactions from Brexit campaigners who attacked its record on economic forecasting. |
| The forecasts proved incorrect. The British economy avoided recession and the stock market hit a record high, however the UK has fallen to the bottom of the G7 growth league and households have lost £900 each because of higher levels of inflation, according to the Bank of England. | The forecasts proved incorrect. The British economy avoided recession and the stock market hit a record high, however the UK has fallen to the bottom of the G7 growth league and households have lost £900 each because of higher levels of inflation, according to the Bank of England. |
| Pradhan said the fund was open to scrutiny about its models, but added: “We believe [the latest assessments] are reasonably robust. There’s always an amount of uncertainty about these estimates and we would acknowledge that.” | Pradhan said the fund was open to scrutiny about its models, but added: “We believe [the latest assessments] are reasonably robust. There’s always an amount of uncertainty about these estimates and we would acknowledge that.” |
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| Economics | Economics |
| European Union | European Union |
| Europe | Europe |
| Brexit | Brexit |
| Dominic Raab | Dominic Raab |
| Trade policy | Trade policy |
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