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Bloomberg
The OECD warned that a no-deal Brexit would push the UK into a recession, send investment and exports plunging and create damaging long-term fallout for the economy.
In a report, the Paris-based group said exports would “immediately decline†by 8 percent, and uncertainty would put the brakes on business spending. While part of the trade shock would be absorbed by the pound, which it forecasts would fall 5 percent on exit, the economy’s performance would be severely hampered, according to its analysis.
The OECD also pointed to longer-term effects that would hold back the economy’s potential.
“A gradual reduction in UK trade openness would start to adversely affect the overall
economic dynamism of the economy, reducing competition, the inflow of new ideas and productivity,†it said. The warning comes amid a Supreme Court hearing in London, where judges are hearing a case on PM Boris Johnson’s decision to suspend parliament.
The OECD said part of the shock to the UK economy could be offset by interest-rate cuts and other monetary easing by the Bank of England, while the government could add fiscal stimulus.
A no-deal Brexit would also impact the rest of the EU. Exports from other EU economies to the UK are estimated to decline by16 percent as a result of higher trade costs.