How will Brexit shape the UK economy?
As we await news from Theresa May about her plans for leaving the EU, there remains a lot of uncertainty and concern about what will happen to jobs, business investment, consumer spending and interest rates.
With so much uncertainty about the current path of Brexit, our latest UK Powerhouse report explores the path of three distinct economic forecasts:
Downside, meaning if no deal is reached between the UK and EU
Central, meaning based on a deal roughly in line with the Withdrawal Agreement
Upside, meaning that the UK and EU can agree on sufficient points to form a type of customs union that emulates the current trading arrangement
· The UK’s departure under the current proposed Withdrawal Agreement will have a detrimental long-term effect on the UK economy, but the impact will not be as bad as the 2007-2008 financial crisis
· After 2019, unemployment will initially increase in all potential Brexit forecasts. However, even with a no-deal, unemployment will remain 1.8% below its peak during the financial crisis
· In the case of a ‘no-deal’ Brexit, gross domestic product (GDP) and business investment growth are both set to see sharp declines in the short term. At their lowest points, GDP is expected to contract 0.2% annually while real business investment falls by 8.4%
· The report anticipates a more stable trajectory across most of the macro indicators, as the transition period gives time to pursue an orderly Brexit
· From 2025, the interest rate in the downside and central scenarios move in tandem, as the Bank of England remains committed to normalising monetary policy.
Our team of experts can help you plan and prepare for any Brexit outcome. Get in touch to find out more.
CEO of Business Legal Services at Irwin Mitchell
Click here to view the full report
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