No-deal could cause £30bn economic hit

No-deal could cause £30bn economic hit - MarketPulseMarketPulse

image

Home/AUD/CAD/CHF/CNH/EUR/Forex News Round Up/GBP/JPY/MXN/NZD/SGD/USD

Share 0

Public borrowing could double next year if there is a no-deal Brexit, the country’s spending watchdog says.

The Office for Budget Responsibility (OBR) said borrowing would be almost £60bn if the UK leaves without a deal – up from £29.3bn if it does get a deal.

The watchdog said this scenario was based on assumptions that a no-deal Brexit would cause a UK recession.

The UK is set to leave the European Union on 31 October.

Chances of a no-deal outcome appear to have risen recently, after both Tory leadership contenders said they would be willing to leave the EU without a deal.

The OBR was created in 2010 to give independent analysis of the UK’s public finances.

In its first assessment of the economic impact of a no-deal scenario, the OBR used IMF analysis that shows the UK economy would contract by 2% in 2020 before recovering in 2021.

This would come as tariffs of 4% were imposed on goods traded with the EU – up from zero currently – although the IMF does not expect there to be disruption at the border.

In this scenario, the OBR said that “heightened uncertainty and declining confidence” would deter investment, while higher trade barriers with the EU would “weigh on exports”.

“Together, these push the economy into recession, with asset prices and the pound falling sharply,” it said.

It said this could push up public sector borrowing, leaving debt 12% higher by 2024.

The OBR added this was “not necessarily the most likely outcome” but also “by no means the worst case scenario”.

It also warned that both Conservative leadership contenders had made “a series of uncosted proposals for tax cuts and spending increases that would be likely to increase government borrowing by tens of billions of pounds if implemented”.

Read more BBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.

Dean Popplewell

Latest posts by Dean Popplewell (see all)

Original author: Dean Popplewell
ADP Canada National Employment Report
Bank of Korea cuts policy rate in July amid growin...
 

Comments

No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Guest
Thursday, 22 August 2019
 
     
 

Latest Spot Rate

 
Wait a minute, while we are rendering the calendar
How It Works | About | Contact | Privacy Policy | Forex Marketing
© 2009 - 2019 Forex Forum. All Rights Reserved. Risk Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.