Failure to strike a post-Brexit trade deal with the European Union (EU) would more than halve the pace of Britain’s economic recovery from the coronavirus pandemic, KPMG forecast on Wednesday, November 18.
Gross domestic product (GDP) growth will reach 4.4% in 2021 without a deal, the accountancy group estimated.
That compared with a 10.1% expansion if current trade links were maintained, KPMG predicted.
Reports suggest that London and Brussels are inching towards a trade agreement ahead of a year-end deadline. (READ: Firms scorn UK over Brexit plans)
KPMG also forecast that the UK economy will have slumped by 11.2% this year on COVID-19 restrictions.
And it projected the economy could potentially grow 7.2% in 2021 under a so-called “skinny” scenario that assumes a slimmed-down Brexit deal excluding services.
“The impact of Brexit will single the UK out among advanced economies next year,” said Yael Selfin, chief economist at KPMG UK.
Selfin urged the UK government to increase investment on infrastructure and skills “to alleviate the longer-term impact [that] Brexit will have on productivity and growth.”
Britain formally quit the EU in January but has continued to observe all its rules during a transition period that ends at 2300 GMT on December 31. (READ: Deal or no deal, Brexit to hit British trade hard)
While Britain’s economy enjoyed a record 3rd quarter rebound from its deepest ever recession, experts predict another slump during the 4th quarter amid fresh coronavirus restrictions to curb the pandemic.
“We expect the November lockdown in England to cause GDP to fall again in the 4th quarter,” added KPMG in Wednesday’s report.
“As a result, output in 2020 as a whole will contract by 11.2%, nearly 3 times the contraction during the 2009 recession.”
The UK economy had expanded by 15.5% in the July-September period after an initial coronavirus lockdown was eased, recent official data showed.
Activity bounced back after shrinking by almost a fifth in the 2nd quarter on the back of the initial lockdown.
Britain’s COVID-19 death toll has meanwhile passed 50,000 – the highest in Europe. – Rappler.com