No-deal Brexit will plunge UK into prolonged recession, new analysis warns
A no-deal Brexit would plunge Britain into a prolonged period of falling living standards and rising unemployment, a leading international ratings agency has said.
In a new report, Standard and Poor’s painted a devastating picture for the economy if UK crashes out of the EU without a deal next year.
The global firm predicted a raft of damaging consequences, including a property market slump, rising inflation and a drop in household incomes of £2,700 in the first year after exit.
It warned that the changes could lead to the UK’s credit rating being downgraded, which would prompt a spike in government borrowing costs.
S&P said it had undertaken the analysis because the likelihood of a no-Brexit has increased in recent weeks, with talks deadlocked over future trading arrangements and the Northern Irish border.
S&P Global Ratings credit analyst, Paul Watters, said: “Our base-case scenario is that the UK and the EU will agree and ratify a Brexit deal, leading to a transition phase lasting through 2020, followed by a free trade agreement.
“But we believe the risk of no deal has increased sufficiently to become a relevant rating consideration.
“This reflects the inability thus far of the UK and EU to reach agreement on the Northern Irish border issue, the critical outstanding component of the proposed withdrawal treaty.”
It comes as new figures show Irish passport applications have doubled since the EU referendum result, as Britons seemingly rush to retain the travel privileges that come with EU membership.
According to official figures released yesterday, 80,752 Brits applied for an Irish passport last year - up from about 46,000 in 2015. And from January to June this year, the Irish embassy in London received 44,900 applications.
Neale Richmond, chairman of the Irish Senate’s Brexit committee, said: “Since the people of the UK voted, narrowly, to leave the EU in 2016 we have seen a continuing rise in the number of applications for Irish passports in the UK. “At least 10% of the UK’s population, not including Northern Ireland, are estimated to qualify for an Irish passport and in light of Brexit many are staking their claim.
“Figures released to me by the Irish embassy in London have shown that there is no sign of this rush for Irish passports abating."