Brexit To Lead To UK Recession?

The turmoil in the wake of Brexit may be calmed a bit – after all, it’s been roughly a month and markets (stocks and otherwise) have notoriously short memories. But get ready for a bump of another sort, Reuters noted Tuesday (July 19), as the specter of recession looms.

The European Commission said Tuesday, in figures building off of projections last week that called for a drag on British gross domestic product to be between 1 percent to 2.5 percent by next year, that growth, including the impact, to be 1.3 percent to 1.6 percent this year, while next year there may actually be a decline of as much as 30 basis points.

There are a few optimists in the forecasting crowd, according to the newswire, which stated that more sanguine projections call for a 1.1 percent gain in 2017, which would be a far cry lower than the 1.9 percent top end forecast that was in place prior to Brexit.

What of the E.U. writ large? Brexit, not surprisingly, has far-reaching impact, the Commission stated, that “will affect not only the U.K. but also the rest of the E.U. economy through several transmission channels, mainly uncertainty, investment, trade and migration.”

The estimates show a limited impact in the E.U. zone, with growth still ahead this year to around 1.5 percent, while 20 basis points might be shaved from that tally next year, to about 1.3 percent on the low end of forecasts – yet projections had 2017 at 1.8 percent, so there is likely to be some impact.

Not surprisingly the E.U. cautioned that this assessment could in fact be changed, as so much is up in the air about the timing, mechanics (and, dare we say it, psychology) of the exit.


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