UK may already be in recession as Brexit crisis continues - NIESR
The Brexit crisis may have tipped Britain into a recession, a report by a leading think tank stated on Monday.
The National Institute of Economic and Social Research (NIESR) said there was a one in four chance the UK was in a technical recession, describing the nation's economic outlook beyond October as "murky" as the Brexit crisis deepens.
It warned that risks to growth were "heavily weighted to the downside" given that the chances Britain would leave the European Union without a deal on October 31 were now roughly 40%.
While the report said there was a 30% chance that the UK economy would contract in 2020, based on an average of all Brexit scenarios, it was expected to grow by around 1% in 2019 and 2020 if a no-deal Brexit is avoided, though continued uncertainty would still hold back investment and productivity growth would likely remain weak.
In the case of an orderly no-deal Brexit, NIESR forecast that the economy would contract in 2020 before recovering to growth the following year, while a disorderly no-deal scenario was seen as likely to case a "severe downturn".
"Some loosening of the public purse appears inevitable and we expect public sector borrowing to rise above 2% of GDP, with the possibility of substantial over-runs of the government’s fiscal objectives in the event of a no-deal Brexit," said the institute.
The report's gloomy tidings come just under a week after the Office for Budget Responsibility said the country might be entering a full-blown recession and stated that leaving the EU without a deal would damage the economy further.
A no-deal Brexit appears more likely than ever as Boris Johnson, who has pledged to get Britain out of the EU by the end of October, even if no deal can be secured, remains the favourite to come out on top in the Conservative leadership election on Tuesday.