UK: Expect a hard Brexit to be delivered over next 2 years

Analysts at Nomura brief us with fresh insights on the UK economic outlook, in light of a Hard Brexit.

Key Quotes:

“We expect a hard Brexit to be delivered over the next two years by Prime Minister May. While the UK should have exited the EU via Article 50 by spring 2019, a comprehensive free trade agreement with the EU is likely to take substantially longer to negotiate.”

“Business and foreign direct investment are likely to suffer in the first instance, with the knock-on effect on employment and the fall in sterling both hitting household incomes/consumer spending.”

“Nonetheless, we are above consensus for growth this year and see CPI inflation rising to a peak of around 2.75% by end-2017/early 2018. We expect the Bank of England to largely look through this overshoot and not raise interest rates until H2 2019, when the MPC will understand much more about the process and implications of Brexit, and dovish Governor Mark Carney will have left the Bank.”

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