Brexit is estimated to have wiped 2% off the UK’s GDP even before the exit date

Brexit is estimated to have wiped 2% off the UK's GDP even before the exit date

In an interview this weekend with German newspaper Frankfurter Allgemeine Zeitung, Barnier appeared to pour chilly water on the plan, reiterating the EU’s place that the U.Okay. can not choose and select to maintain or discard the components of the EU “ecosystem” that it likes and dislikes.

As such, the potential of a “cliff-edge” state of affairs the place Britain leaves the EU with out a commerce deal or shut alignment to the EU (conversely seen as a “softer” Brexit) is being seen by analysts as extra possible.

But drastic financial predictions that the U.Okay. financial system may enter recession after the Brexit vote in June 2016 have didn’t materialize, with strong employment knowledge and wage progress seized upon by Brexiteers as proof that leaving the EU won’t be as disastrous as opponents imagine.

Nonetheless, progress forecasts for the U.Okay. look lackluster. In July, the Worldwide Financial Fund lowered its U.Okay. GDP progress forecast for 2018 once more, predicting 1.four p.c progress down from the 1.6 p.c envisaged in its April forecast.

Nonetheless, Brexiteers can console themselves with the newest progress knowledge that confirmed the U.Okay. financial system grew zero.four p.c within the second quarter (from the earlier quarter), the identical because the euro zone as an entire. In the identical interval, Germany’s financial system grew zero.5 p.c

UBS’ economists additionally famous that the affect of the Brexit vote on U.Okay. companies has not been as dire as anticipated.

“As is pure for anybody driving in direction of a cliff — on this case U.Okay. corporations seemingly going through a pointy enhance in tariffs and non-tariff obstacles — one would anticipate them to start out hitting the brakes: i.e. cut back employment and funding selections as uncertainty mounts. However unemployment (four p.c) simply nudged all the way down to its lowest stage since 1974, wage progress is rising and gross mounted capital formation bounced again resolutely within the second quarter from its first quarter weak spot,” they mentioned.

“Though many different knowledge look decidedly lackluster, the seemingly muted response of U.Okay. corporations feeds a story that Brexit uncertainty is doing quite a bit much less injury than anticipated,” they added.

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