Behind the Headlines

"No deal Brexit would wipe out economic recovery"

Written on 09/20/2018

What’s the story?

A no deal Brexit risks wiping out the recovery made by the UK since the economic crash in 2008. Read more in the Independent

How reliable is the story?

Reliable. The warning is from the International Monetary Fund (IMF) --  an international economic body -- and matches other warnings about a no deal Brexit.

What’s the background?

  • In its annual health check of the UK economy, the International Monetary Fund (IMF) warned that a no deal Brexit would entail substantial costs. Evidence

  • The organisation stated that all Brexit scenarios would have a negative impact on the UK economy, and the more disruptive the Brexit, the worse the effect. Evidence

  • It is predicted that for every 1% that GDP declines, there will be a 0.4% increase in the UK’s budget deficit. Evidence

  • The effects will be worse if Brexit disproportionately damages tax rich sectors, such as finance, which is more likely to happen in a no deal scenario. Evidence

  • Moreover, migrants from other EU countries to the UK are net contributors to the UK economy, and reducing EU migration will likely have a negative impact on the UK tax take. Evidence

  • The IMF warned all of this will far exceed any savings made from ending contributions to the EU. Evidence

  • Philip Hammond, Chancellor of the Exchequer, endorsed this analysis, warning that no-deal Brexit will wipe out any gains made from £141 billion of cuts and tax rises. Evidence

  • This comes just a week after the chancellor warned that a no deal Brexit under the current government would result in further austerity. Evidence

image courtesy EU2017EE Estonian Presidency via flickr

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