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No‐trade‐deal Brexit would lower GDP by 1ppt by 2022
Publication year - 2020
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/1468-0319.12513
Subject(s) - brexit , economics , international economics , trade barrier , commercial policy , international trade , economic integration , tariff , offset (computer science) , baseline (sea) , european union , oceanography , computer science , programming language , geology
▀ A no‐trade‐deal Brexit would result in UK GDP being 1ppt lower than our baseline forecast at the end of 2022. Increased trade frictions and a negative reaction from financial markets would more than offset looser policy settings. ▀ Even if an FTA is agreed, trade between the UK and EU will be subject to new customs and regulatory trade barriers. If a trade deal is not agreed, tariffs will also be levied on UK‐EU trade, while non‐tariff barriers are likely to be higher. ▀ A no‐trade‐deal outcome would almost certainly see the BoE undertake further quantitative easing. A further, temporary, loosening of fiscal policy would also be likely, with higher government investment an obvious option.