Chance of hard Brexit at 25 percent, say economists in Reuters poll

Anca Alexe 04/09/2018 | 08:26

A Reuters poll shows a 25 percent chance that the UK will leave the EU in March 2019 without a deal. The poll was conducted as PM Theresa May is under increasing pressure while trying to sell her “business-friendly” Brexit to her own party and across a divided country.

There are less than two months left until the two sides want to agree on the terms of Brexit, but there is no clear solution in sight, which raises the possibility of a “no-deal” Brexit. The poll’s median forecast for no deal was 25 percent, which is unchanged from a previous estimate in August. However, some of the respondents raised their estimates while others reduced them.

“The chances of the UK leaving the EU has undoubtedly risen recently, and we have become less confident of an orderly exit,” said Howard Archer at EY ITEM Club. “Nevertheless, we still think it is more likely than not that the UK and EU will come to a deal, although it could very well be uncomfortably late for ratification by March 2019.”

Asked about the chance of a recession, poll responses put the chance of one occurring in the coming year at 15 percent – down from 20 percent given in July – and at 25 percent for a recession occurring within two years.

With the lack of clarity on how the UK will trade starting April 2019, the median forecasts for post-Brexit economic growth were revised down from previous projections – 1.4  percent for next year and 1.6 percent for 2020.

UK manufacturers recorded their weakest month in over two years and a rare export decline was seen in August, which shows that the world economic slowdown and the approach of Brexit is taking a toll on the country’s factories.

 

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