Cancellation of trade deal with EU could affect UK economy

Thinkers and Economists says that if an agreement is not made between EU and Britain in the post-Brexit sessions, it could have a really bad effect on Britain’s economy. They say that this crisis could hit the economy three times harder that the Covid-19 problems.

Many adverse effects can occur like food scarcity, lack of medical attention and also travelling could also be affected.

A recent report based on modelling with the London School of Economics predicts that the effect of Covvid-19 may mitigate or obscure the impact of a no-deal exit. It also points out that without forming an understanding with Brussels will have a crucial impact on the long run.  

Within the report it says that the claim that the economic impacts of Covid-19 dwarf those of Brexit is almost certainly correct in the short term.

“Not even the most pessimistic scenarios suggest that a no-deal Brexit would lead to a fall in output comparable to that seen in the second quarter of 2020,” it said.

“However – assuming a reasonably strong recovery, and that government policies succeed in avoiding persistent mass unemployment – in the long run, Brexit is likely to be more significant.

“Our modelling with LSE of the impact of a no-deal Brexit suggests that the total cost to the UK economy over the longer term will be two to three times as large as that implied by the Bank of England’s forecast for the impact of Covid-19.”

Boris Johnson has ruled out an expiring agreement regarding the single market and customs union rules, which aligned UK to the EU, to allow a smooth flow of trade after Brexit.

As the deadline of October 15 is still standing still, trade deal talks are happening between both the sides. But as the PM said, the agreement should be reached before October 15, or else he had made it clear that he will walk out.

The fear factor that surrounds this entire drama is that if no trade deal happens, it could impact sessions of the Irish economy very badly.  

“While the Prime Minister said no deal is a ‘good outcome’ our report shows that it may lead to significant disruption and will have a significant negative economic impact,” said the director of the UK in a Changing Europe, Professor Anand Menon.

“As significant will be the political fallout of no deal, particularly with the UK and EU, but also inside the UK, particularly Northern Ireland, and internationally too,” he said.