Brexit does dam­age to Bri­tish growth

The Myanmar Times - - International Business -

THE In­ter­na­tional Mon­e­tary Fund cut its 2017 growth fore­cast for Bri­tain, blam­ing Brexit, and warn­ing the dam­age could be greater if rocky ne­go­ti­a­tions lead to trade bar­ri­ers.

The IMF said it now ex­pects Bri­tain’s gross do­mes­tic prod­uct (GDP) to ex­pand by 1.1 per­cent in 2017, a down­grade of 0.2 points from the pre­vi­ous pre­dic­tion given in July.

That marks a sig­nif­i­cant slow­down com­pared with its es­ti­mate for 2016, the IMF said in its lat­est World Eco­nomic Out­look re­port.

The Bri­tish econ­omy is now ex­pected to grow by 1.8pc this year, up 0.1 points from prior guid­ance.

“In the United King­dom slower growth is ex­pected since the ref­er­en­dum as un­cer­tainty in the af­ter­math of the Brexit vote weighs on com­pany in­vest­ment and hir­ing de­ci­sions and con­sumer pur­chases of durable goods and hous­ing,” the IMF said.

It added its as­sump­tions are based on “smooth post-Brexit ne­go­ti­a­tions and a lim­ited in­crease in eco­nomic bar­ri­ers”.

How­ever that may not turn out the case, the IMF warned.

The Bri­tish pound crashed to 31year dol­lar lows on Oc­to­ber 4 in the wake of week­end com­ments by Prime Min­is­ter Theresa May in­di­cat­ing a will­ing­ness to leave the sin­gle mar­ket in or­der to se­cure con­trol over im­mi­gra­tion from the EU.

The sin­gle mar­ket gives Bri­tain tar­iff-free ac­cess to the EU.

The IMF also sig­nalled that the Bri­tish govern­ment, which is due to un­veil its bud­get up­date on Novem­ber 23, may need to re-as­sess its deficit-slash­ing mea­sures in a bid to bol­ster growth.

The IMF ac­knowl­edged that the Bank of Eng­land’s wide-rang­ing stim­u­lus pro­gram had buoyed sen­ti­ment.

In Au­gust, the bank slashed in­ter­est rates by a quar­ter-point to a record-low 0.25pc and ex­panded its main quan­ti­ta­tive eas­ing bond-buy­ing scheme by £60 bil­lion to £435 bil­lion.

The IMF said that the BoE’s stim­u­lus plan “sig­nals its com­mit­ment to limit post-Brexit down­side risks and main­tain con­fi­dence”. –

Newspapers in English

Newspapers from Myanmar

© PressReader. All rights reserved.