Brexit: Britain’s trade choice could prolong 300 years of the worst recession

The Office of Budgetary Responsibility said on Wednesday that the non-agreed Brexit would cut emissions by 2% next year and leave the UK economy 1.5% lower after five years compared to the scenario when Prime Minister Boris Johnson concludes an agreement with Brussels.

They talk about fishing rights, state aid to companies and dispute settlement. Johnson must decide whether insisting on national sovereignty in all three areas is worth the economic price the UK will pay if negotiations fail.

Tariffs, export quotas, bureaucracy and other barriers to trade that do it will take effect on 1 january, if no convention is reached, it would extend the UK’s recovery from the coronavirus recession by almost a year, the guard said. Unemployment would be another percentage point higher, he added.

Johnson has little time to conclude a new trade agreement with the European Union, but the UK will find itself in a serious situation even if an agreement is reached. The Office of Budgetary Responsibility expects a 11.3% drop in GDP this year, the largest drop in annual emissions since the Great Frost of 1709, the coldest winter in Europe for 500 years, causing widespread death and destruction in agriculture.

And even with the Brexit agreement, the guard says the economy is likely to experience a constant “scarring” that will reduce emissions by 3% under a central scenario in which coronavirus restrictions remain in place until spring.

A Brexit without the deal would be worse for the UK economy than Covid-19 - says Governor of the Bank of England

Finance Minister Rishi Sunak on Wednesday unveiled a £ 4.3bn ($ 5.7bn) spending plan to help prevent unemployment through measures such as job support for young people and increasing the capacity of job centers.

The Office of Budgetary Responsibility expects unemployment to rise to 7.5% by the second quarter of next year, meaning 2.6 million people will be out of work – 1 million more than the current level. If no agreement is reached on the Brexit agreement, unemployment will peak at 8.3% in the third quarter of 2021, and recovery from the epidemic will last until the third quarter of 2023 instead of the end of 2022.

“Our health emergency is not over yet and our economic emergency has only just begun,” Sunak said in a speech to parliament. The UK government is spending £ 280 billion ($ 373 billion) on support measures to help the country survive the coronavirus, he added.

Brexit warnings

The trade relationship between the European Union and the UK is worth nearly $ 900 billion, with Bank of England Governor Andrew Bailey saying this week that the economic devastation caused by the uncompromising Brexit would be worse than the epidemic in the long run.

“It will take much longer for me to call the real side of the economy to adapt to a change in openness and a change in the profile of trade,” he said in his statement to Parliament before the Treasury Committee on Monday.

Even if Britain and the European Union reach an agreement, UK companies will still face additional costs in doing business, such as border controls and customs regulations, when many are suffering from the effects of the pandemic on trade.

– Charles Riley contributedg.