The IMF have today issued a coruscating report on the impact of Brexit on the British economy.
Uncertainty over the terms of the EU withdrawal has weighed on private sector activity. Above-target inflation following the sharp post-referendum sterling depreciation has slowed real income and consumption growth. Business investment has been lower than would be expected in the context of robust global growth and favorable financing conditions. The softening of domestic demand was partially offset by a higher contribution from net exports, supported by weaker sterling and strong external demand. Overall, growth fell to about 1¾ percent in 2016-17, moving the United Kingdom from the top to near the bottom of the G7 growth tables.
…fundamental questions—such as the future economic relationship between the two and the closely-related question of the status of the land border with Ireland—remain unanswered. Resolving these issues is critical to avoid a “no deal” Brexit on WTO terms that would entail substantial costs for the UK economy—and to a lesser extent the EU economies—particularly if it were to occur in a disorderly fashion. While all likely Brexit outcomes will entail costs for the UK economy by departing from the frictionless single market that now prevails, an agreement that minimizes the introduction of new tariff and nontariff barriers would best protect growth and incomes in the UK and EU. Over time, new trade agreements with countries outside the EU could eventually pare some of these losses for the UK. However, such agreements are unlikely to bring sufficient benefits to offset the costs imposed by leaving the EU.
Commenting, Owen Smith MP, leading supporter of the People’s Vote campaign, said:
“The IMF’s verdict is that Brexit has already made us less well-off and will damage our future prospects for years to come.
“The IMF say that before we have even left Brexit is putting up prices in the shops and driving away business investment.
“Whether it is Theresa May’s Chequers Car Crash or Jacob Rees-Mogg’s No Deal Disaster the IMF can find nothing positive in Brexit.
“Nobody voted to see medicines stockpiled, holidays made more expensive or for the pound to take a battering. Nobody voted to weaken our country and diminish our influence in the world. But already Brexit is doing all of these things and that is why more and more people are joining the demand for a People’s Vote on the final Brexit deal.”
Notes to editors
The IMF’s report can be read here: https://www.imf.org/en/News/Articles/2018/09/17/United-Kingdom-Staff-Concluding-Statement-of-the-2018-Article-IV-Mission