No-deal Brexit would drop output, UK firms caution: survey

December 13, 2018 - United Kingdom

British businesses expect a sharp drop in output if the United Kingdom leaves the European Union (EU) next year with no deal and no transition, according to a recent Bank of England (BoE) survey. The output of companies would drop between 2.5 and 6.9 per cent over the next 12 months under such a scenario, the October-November survey covering 369 firms suggested.

Output could rise between 0.8 per cent and 2.7 per cent if a deal and transition period were agreed, a news agency reported citing the BoE survey.

Prime Minister Theresa May’s Brexit plan has been agreed with the EU but faces deep opposition in parliament where it faces a vote on December 11.

Just under a third of firms had made changes to their plans preparing for Brexit, such as setting up new legal entities or altering their supply chains, BoE said. Other companies were cautious about spending to prepare for Brexit until it was needed.

The BoE said recently that the United Kingdom may suffer an even bigger hit to its economy than during the global financial crisis 10 years ago if it leaves the EU in a worst-case Brexit scenario. (DS)