- Britain May plunge into Recession Without Brexit Deal
The United Kingdom could plunge into an economic recession in 2020 if the country leaves the European Union without a deal.
According to the Office for Budget Responsibility (OBR), borrowing could hit £60 billion from the current £29.3 billion with no-deal Brexit.
This was after Tory leadership contenders said they would be willing to leave the union without a deal.
The OBR predicted that the economy would contract by 2 percent in 2020 due to the imposition of 4 percent tariffs on goods traded with the EU, up from the current zero.
However, the economy is expected to recover in 2021 when business would have adjusted to the new price difference but not without eroding consumer spending and hurting job creation.
The situation, according to OBR report, would “heightened uncertainty and declining confidence” would deter investment, while higher trade barriers with the EU would “weigh on exports”.
“Together, these push the economy into recession, with asset prices and the pound falling sharply.”
The central bank said the UK economy could shrink by 8 percent in 2020 and expect public debt to rise by 12 percent by 2024.
“This warning makes it even more imperative MPs from across Parliament back today’s amendments to try and block the next prime minister from shutting down Parliament to force through a no-deal Brexit,” said John McDonnel, Labour’s shadow chancellor.
He said: “We know that a no-deal Brexit would devastate the UK economy and the public finances, and it comes on top of the failed economic approach for the last nine years.
The Liberal Democrat business and treasury spokesman, Chuka Umunna, said: “It would be unforgiveable to heap further stress and anxiety on families who are already struggling by deliberately pursuing a policy that the government’s own independent economic watchdog now says will result in a recession.”