No-deal Brexit likely to push UK budget deficit to 100 billion pounds - IFS

Dhwani Mehta FXStreet

The Institute for Fiscal Studies (IFS) Deputy Director Carl Emmerson, warned in his latest report released on Tuesday, a no deal Brexit will send public debt rocketing to levels not seen for nearly 50 years, as cited by Reuters.

Key Highlights:

“Borrowing would rise to 92 billion pounds - equivalent to 4% of national income - by 2021/22 under a “relatively benign” no-deal Brexit scenario, in which there are no major delays at borders.

Even then, the economy would still enter recession in 2020.

If the government undertook enough fiscal stimulus to stop the economy contracting - roughly 23 billion pounds of extra spending in 2020 and 2021 - annual borrowing would peak at 102 billion pounds.

A no-deal Brexit would likely require a fiscal short-term stimulus followed by a swift return to austerity.

In the longer term, a no-deal Brexit would mean less money to spend on public services - or higher tax rates - than staying in the EU or leaving with a deal.”

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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