Deal or Not, Brexit Is Seen Hampering U.K. Economic Rebound
(Bloomberg) -- Leaving the European Union’s single market will drastically undermine the U.K.’s recovery from a slump caused by the coronavirus pandemic, according to KPMG.
Britain’s economy will expand 7.2% next year, according to forecasts from the consultancy that assume the two sides can strike a trade deal. That’s 2.9 percentage points lower than it would have been if the country maintained its current relationship with the bloc.
Without a trade agreement, output will only rise 4.4%, KPMG said, highlighting the stakes for Prime Minister Boris Johnson as negotiators zero in on a possible deal. In any case, Brexit remains a cloud over the outlook even with the promise of Covid vaccines being rolled out in the next few months, hampering the recovery from an estimated 11.2% contraction in 2020.
“We need to brace ourselves for major changes,” KPMG Chief Economist Yael Selfin said in an interview. “Next year we’ve got a lot of uncertainty, whatever happens with Covid.”
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