Economists still rate ‘no deal’ Brexit oneinfour chance
LONDON: There is still a oneinfour chance Britain and the European Union will part ways in less than six months without reaching a deal, according to a Reuters poll taken as EU leaders prepare to meet in Brussels later this week.
The stubborn problem of resolving the United Kingdom’s postBrexit land border with Ireland thwarted an effort over the weekend to clinch a deal before this week’s EU summit as negotiators admitted defeat after marathon talks.
Both sides want to finish talks by midNovember to give parliaments in London and Brussels time to approve a deal before Britain otherwise crashes out in March, an outcome that would plunge businesses and millions of citizens into a chaotic and costly legal limbo.
British Prime Minister Theresa May faces stiff opposition at home and abroad to her plans and is struggling with deep divisions in her own party. Boris Johnson, her former foreign minister and figurehead of Britain’s Brexit campaign, said talks were ‘‘now entering the moment of crisis’’.
May said yesterday she continued to believe a deal was achievable and real progress had been made in recent weeks on both the withdrawal agreement and future relationship. She also said progress had been made on Northern Ireland, the UK’s only land border with the EU.
When asked what probability they attached to the likelihood of a disorderly Brexit — where no divorce deal is reached — economists questioned largely before the talks hit an impasse gave a median 25%, unchanged from a September poll. The highest forecast was 80%.
‘‘A deal is still more likely than not,’’ Kallum Pickering, at Berenberg, said.
‘‘At any rate, the range of possible outcomes remains wide. But then again, did anyone seriously think this would be a walk in the park?’’
The most likely eventual outcome is the two sides reaching a freetrade agreement, the poll taken from October 915 found, as has been predicted since Reuters first began polling on the subject two years ago.
In second spot was leaving without an agreement and trading under basic World Trade Organisation rules. Holding in third place was Britain belonging to the European Economic Area, paying to maintain full access to the EU’s single market.
Keeping its position as least likely was Brexit being cancelled. No respondent pegged this as most likely.
With little clarity as to how Britain will part ways with the EU, the respondents did not expect the Bank of England to adjust monetary policy until after the March departure.
They forecast that it would lift the Bank Rate by 25 basis points to 1% in the second quarter of next year and follow that up with a matching increase in early 2020.
Growth would remain robust, albeit slower than expected for Britain’s peers. The UK economy was predicted to expand 1.3% this year, 1.5% in 2019 and 1.6% in 2020, the poll of more than 80 economists found.