Connect with us

Politics

Britain risks long Brexit recession as negotiators struggle for a deal

Published

on


Theresa May
Theresa
May

Sean Gallup/Getty
Images


  • Brexit talks resume in Brussels as negotiators struggle
    to secure a deal on the Northern Ireland border.
  • A leading credit ratings agency warns that Britain
    risks an extended recession if if fails to gain an exit
    agreement.
  • Britain could permanently lose 5.5% of growth.
  • Norway has rejected calls for Britain to temporarily
    join the European Economic Area after Brexit.

LONDON — Britain risks an extended recession if it fails to win a
Brexit deal, a leading credit agency has warned as negotiators
continue to struggle to agree a deal.

Standard & Poor’s, one of the world’s leading financial
services companies, said on Tuesday that a no deal
Brexit would trigger a lengthy recession in the UK, that
would 
shrink the UK economy by 1.2%  in 2019 and
a further 1.5% in 2020.

“Most of the economic loss of about 5.5 % (of) GDP over three
years compared to our base case would likely be permanent,”
S&P said.

If the UK exits with no deal and defaults to WTO trading rules,
inflation will hit 4.7% and unemployment will increase to 7.4% by
2020 — its highest level since the aftermath of the
2008 financial crash, Standard & Poor’s said.

The warning came as Brexit talks resumed in earnest on Tuesday
evening as UK and EU negotiators try to make a breakthrough on
the Irish border question and strike a deal in time for the
December summit.

Olly Robbins, the UK’s most senior civil servant handling Brexit
negotiations, travelled to Brussels to meet with his EU
counterpart, Sabine Weyand, who works for Brussels’ chief
negotiator Michel Barnier.

Talks are set to continue at a technical level for the rest of
the week, sources close to both the UK and EU negotiating teams
told Business Insider on Wednesday morning.

Negotiators are trying to find a mutually acceptable version of
the backstop policy for preserving the frictionless Irish border
no matter what the outcome of Brexit talks and subsequent UK-EU
trade deal negotiations.

‘You’ve only got five months left’


Dominic Raab
The Brexit Secretary Dominic Raab
WPA Pool/Getty

Back in Westminster, MPs are searching for ways of avoiding a
dreaded no deal scenario.

Conservative MP Nick Boles is leading calls for Theresa May to
use the so-called Norway model as the backstop. Under Boles’ plan
— “Norway for now” — the UK would remain in the single market and
be in a new customs union with the EU until a free trade
deal covering the invisible Irish border is ready to be
implemented.

BI understands that around 15 MPs met with Norway model
campaigners to discuss the policy on Tuesday night. These MPs
included Boles, plus his Tory colleagues Nicky Morgan, Stephen
Hammond, and George Freeman.

However, Norwegian Prime Minister Erna Solberg appeared to kill
any hope of the UK temporarily replicating Norway’s relationship
with the EU, telling reporters: We would welcome any good
cooperation with Britain.

“But to enter into an organisation [the European Free Trade
Association and European Economic Area] which you’re leaving is a
little bit difficult for the rest of us,” Solberg said on
Tuesday.


Erna Solberg Theresa May
Erna Solberg and Theresa
May.

Rune Hellestad/Getty
Images


Solberg addressed the media alongside UK Prime Minister May, who
announced that all Norwegian citizens living in the UK would
automatically retain all of their rights no matter what the
outcome of Brexit negotiations.

The prime minister’s warm words about EU and EEA citizens living
in the UK were somewhat undermined by Immigration Minister
Caroline Nokes’ comments before the Home Affairs Select
Committee.

Nokes said that under a no
deal Brexit, employers will need to check that EU and EEA staff
have the right to work in the UK, despite the Home Office
suggesting this summer that these checks would not need to take
place.

Nokes also revealed that despite exit day being just five months
away, the UK government does not know what these checks would
entail, while just 650 of 3.5 million EU citizens who are
estimated to live in the UK have completed the settled status
scheme which confirms their right to remain in the country after
Brexit.

An exasperated committee chair Yvette Cooper said she was
“baffled” by Nokes’ remarks and exclaimed “you’ve only got five
months left” to the minister and others who were giving evidence
to MPs on Tuesday.

Our Brexit Insider Facebook group is the best place for up-to-date news and analysis about Britain’s departure from the EU, direct from Business Insider’s political reporters. Join here.

Continue Reading
Advertisement Find your dream job

Trending