Caspian Energy Journal Caspian European Club
Wednesday, 31 October 2018 11:00

'No-deal' Brexit likely to tip UK into long recession - S&P

A no-deal Brexit would likely tip Britain into a recession that could last more than a year, credit ratings agency Standard and Poor’s said on Tuesday, Caspian Energy News ( reports with reference to Reuters.

Talks on Britain’s departure from the European Union have stalled over arrangements for the border between the British province of Northern Ireland and the Irish republic if a trading relationship is not agreed in time.

 “Our base-case scenario is that the UK and the EU will agree and ratify a Brexit deal,” S&P Global Ratings credit analyst Paul Watters said. “But we believe the risk of a no-deal has increased sufficiently to become a relevant rating consideration.”

S&P has an “AA” credit rating for Britain — a full step below its top-notch “AAA” rating — but it warned that any failure by London and Brussels to reach a deal would be likely to force it to cut the grade further.

Britain would experience a “moderate” recession lasting four to five quarters in the event of a no-deal Brexit, S&P predicted. This would shrink the world’s fifth-largest economy by 1.2 percent in 2019 and by a further 1.5 percent in 2020.

 “Most of the economic loss of about 5.5 percent (of) GDP over three years compared to our base case would likely be permanent,” S&P said. Unemployment would rise to above 7 percent from around 4 percent now and house prices would be likely to fall by 10 percent over two years, S&P said.

Economists polled by Reuters earlier this month assigned a median one-in-four chance that Britain leaves the EU in March with no deal.

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Person in charge of the newsline: Olga Nagiyeva 

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