Bank warns of UK recession

The Conservative Party’s plans for a “no deal” hard Brexit would plunge the country into immediate recession, cost the British economy £400 billion and wipe 18% off GDP growth by 2030, a leading investment bank has warned.

Research carried out by Rabobank also shows that any form of Brexit would be detrimental to the economy and British workers.

Under a no deal scenario, British workers would be left £11,500 poorer, while an FTA or soft Brexit would see working Britons stomach a £9,500 and £7,500 blow respectively.

Prime Minister Theresa May said earlier this week her Government is putting in place plans for a no deal scenario and the research comes after Chancellor Philip Hammond warned of a Brexit “cloud of uncertainty” hanging over the economy.

Hugo Erken, senior economist at Rabobank, said: “There has been extensive economic research into the immediate effects of Brexit, but they have largely focused on trade and investment, whereas implications of the different factors that affect productivity is only marginally or partially addressed.

“By looking at dynamics such as innovation, competition, knowledge and human capital, how they will change and what effects this will have on the structural make-up of the UK and European economy, our research shows that the longlasting impact of Brexit is likely to be more severe than initially anticipated.”

Rabobank said that even if the UK negotiated a new free trade agreement, like Switzerland’s, it would cost Britain 12.5% of GDP growth by 2030.

A soft Brexit, where the UK remains part of the European internal market but exits the customs union, would result in a 10% hit.

Picture: PA. Chancellor Philip Hammond says there is a “cloud of uncertainty”.