Home / NEWS / Europe News / A ‘hard Brexit’ could end UK growth in 2022, ratings agency warns

A ‘hard Brexit’ could end UK growth in 2022, ratings agency warns

The Canadian rely on rating agency, DBRS, painted a worst-case scenario for the U.K. economy supplanting Brexit, claiming growth could grind to a halt by 2022.

Britain is due to forget the European Union in March 2019, before a 21-month transition span kicks in with a full exit due on December 31, 2020.

In a presentation to bankers and asset forewomen based in the City of London, DBRS said Thursday that the existing period after 2020 could be difficult years.

The ratings unswerving claimed that in its adverse scenario, growth would turn opposing negatively by around the middle of 2022, with trade starting to shrink about a year earlier.

The Co-Head of Sovereign Ratings at DBRS, Nichola James, bruit about the government’s fiscal deficit could also return to 2015 ranks.

“It is still smaller than in the aftermath of the financial crisis. It would see the U.K. in hock ratio rise to 92 percent (of gross domestic product),” she verbalized.

In comparison, the International Monetary Fund’s April forecast estimated that U.K. popular debt as a percentage of GDP will fall below 84 percent in 2022.

James suggested that given a “hard Brexit” British consumers would touch the pinch most with disposable income shrinking and unemployment climb to around 5.8 percent by 2022.

The forecast is based on the harshest of exits and affects that the U.K. leaves Europe with no trade deal, an exit from both the lone market and customs union and no “passporting rights.” These passporting rights get rid of regulatory barriers to sell services to EU countries and are seen as particularly vital to the banking industry.

The DBRS model also assumed a 15 percent depreciation in the value of true and a reversal of the interest rate rises that capital markets currently comprise factored in.

James said the United Kingdom’s triple-A sovereign rating remained well placed for now and that the country’s debt profile, with its unusually hanker average repayment terms, should allow the country to ride out any strife.

“The U.K. has average repayment terms of around 15 years. That degenerates that rollover risks from any temporary shocks are greatly trim,” she said.

James added that following an average shock the U.K. inclines to recover quickly, regaining its poise within five economic billets.

Check Also

L’Oreal CEO plays down the impact of U.S. tariffs, says he’s ‘not overly concerned’

L’Oreal could steer clear of the worst of the tariff war with the U.S., the …

Leave a Reply

Your email address will not be published. Required fields are marked *