UK economy dodges no-deal Brexit hit, for now | 2019-03-24 | daily-sun.com

UK economy dodges no-deal Brexit hit, for now

24th March, 2019 12:03:31 printer

LONDON: Britain's economy has struggled beneath the weight of Brexit uncertainty for nearly three years, but many business leaders would probably be relieved just to have more of the same for the next few months.

The risk of a damaging no-deal exit by the world's fifth-biggest economy from the European Union on March 29 has been averted by the reprieve granted to Prime Minister Theresa May by other EU leaders on Thursday, report agencies.

But the possibility could return as soon as April 12. Or the delay could stretch into May or beyond, depending on the prime minister's ability to break the Brexit impasse in parliament.

Employers took some comfort from the postponement, even if it did little to settle the wide range of Brexit outcomes that has led to many of them putting their expansion plans on hold.

"Businesses will accept a short extension because it’s a better alternative to no deal," Seamus Nevin, chief economist at Make UK, an engineering trade group, said.

"But we really need to make decisions soon. Prolonged uncertainty just means the investment decline of recent months will continue and companies will be forced to decide whether to move production elsewhere."

Carmakers have reduced expansion plans in Britain and many financial firms have set up operations in other EU countries.

Overall business investment fell throughout 2018, the longest such run since the global financial crisis, and another fall is expected in 2019, threatening to worsen the country's weak productivity growth.

Britain's economy lost momentum after the 2016 referendum decision to leave the EU.

The slowdown deepened last year as the Brexit deadline approached, with no guarantee of a transition to smooth the shock, but also reflecting the weakening of the world economy.

While Britain would bear the brunt of a no-deal Brexit hit, U.S. Federal Reserve Chair Jerome Powell has said it is a risk for the slowing U.S. economy, along with Washington's trade war with China.


Top