The IMF has thrown cold water over Theresa May’s talk about quitting the EU without a trade deal as it delivered a depressing verdict on the state of the UK’s economy under the Tories.
May talked tough in Parliament yesterday about her willingness to pursue a cliff edge Brexit in a desperate bid to gain concessions from the EU.
But the International Monetary Fund has warned a hard Brexit would further damage an economy that is heading in the wrong direction.
The UK is the only advanced economy in the world that the IMF does not believe will see economic growth in the near future.
In its new report, the IMF says:
“Growth in most of the other advanced economies, with the notable exception of the United Kingdom, picked up in the first half of 2017 from its pace in the second half of 2016, with both domestic and external demand contributing.”
They downgraded predicted growth in the UK economy by 0.3% to 1.7% this year and expect it to be down further to 1.5% next year.
This table shows just how badly that compares with the Euro Area countries, the US, Japan, Canada and others:
In its report, the IMF explained:
“The slowdown is driven by softer growth in private consumption as the pound’s depreciation weighed on household real income.
“The medium-term growth outlook is highly uncertain and will depend in part on the new economic relationship with the EU and the extent of the increase in barriers to trade, migration, and cross-border financial activity.”
Asked what effect leaving the EU with no deal would have, IMF economic director Maurice Obstfeld said:
“Uncertainty is not good and a cliff edge Brexit without any sort of firm predictable arrangements would involve a lot of uncertainty.”
Rather than trying to send the EU coded messages through Telegraph front pages, Scrapbook humbly suggests May and David Davis actually bother turning up to Brexit talks and do a decent deal before they turn Britain into an economic basket case as well as a political one.