‘No deal’ Brexit risks severe economic shock, International Monetary Fund warns

Old Street Roundabout

Old Street Roundabout

According to the ONS, production industries expanded by 0.2% in the three months to February, marking the first positive three-month growth since October. That would be faster than Germany's 0.8 per cent and only a touch slower than France's 1.3 per cent.

Even with a resolution of Brexit, in the form of an agreed and certain decision by the United Kingdom government and the European Union which is accepted by both their parliaments, there still would be a likely Brexit hit to the economy, according to Archer, as highly stimulated growth through stockpiling now would lead to lower growth later as those stockpiles are consumed.

Setting out its forecast, the International Monetary Fund said: "More generally, a no-deal Brexit that severely disrupts supply chains and raises trade costs could potentially have large and long-lasting negative impacts on the economies of the United Kingdom and the European Union".

In the three months to February the British economy marginally grew, due to businesses stockpiling ahead of Brexit. The annual GDP growth rate accelerated to 2%, the highest since November 2017, although against a comparable period in 2018 when the economy was weak.

There was a surge in manufacturing output for March linked to stockpiling of goods in the run up to what was supposed to have been Brexit, according to ONS data.

The statistics office said it could not quantify the impact of stockpiling on the data.

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The monthly rise was helped by growth in the services and production sectors, while construction had a negative contribution.

There were signs that the slowdown in the global economy was also weighing on Britain's economy.

So far, Britain's exporters have shown no sign of being helped by the fall in the value of the pound caused by the 2016 Brexit referendum.

David Cheetham, chief market analyst at XTB, said that while the nature of the GDP figures is "inherently volatile", the overall trend has no doubt improved.

A spokesman for Britain's finance ministry said the government wanted to leave the European Union with a deal but was getting ready for a possible no-deal Brexit. In a separate statement, they said a lack of "coherent preparation" by governments left manufacturers "woefully unprepared" for a no-deal outcome. She's seeking to push Brexit back to June 30 from the current deadline of Friday.

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