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No-deal Brexit would cost UK more than COVID-19, warns BoE Governor

Author : Pankaj Singh | Published Date : 2020-11-25 

Bank of England Governor, Andrew Bailey, has reportedly warned that the economic cost of a no-deal Brexit would be much more significant in the long haul than the one caused by the COVID-19 pandemic.

Bailey stated that failure to finalize a deal prior to the expiration of the Brexit transition by December end would cause a disturbance in cross-border trade and further harm the good relations of Brussels and London required to develop a future economic partnership.

While addressing the Common Treasury committee MPs, Bailey stated that the fallout from the COVID-19 pandemic as well as the second nationwide lockdown in the country was making a greater short-term impact on the national economy.

However, the long term effects of no-deal Brexit would be greater compared to the long-term impact of the coronavirus pandemic, and it would be much better to conclude on a trade agreement, without a doubt, added Bailey.

With just over a month for the transition period to end, a trade agreement between Brussels and London is really close to be finalized. However, officials have also warned that there remains a risk of a sudden no deal if compromises are not reached.       

Chancellor Rishi Sunak stated that the UK should not settle on an agreement with the European Union at any cost, effectively insisting that the COVID-19 pandemic posed a greater risk to the national economy than a no-deal Brexit. A deal is preferable, but Britain would progress in either case, added Sunak.   

The COVID-19 pandemic and the strict lockdown measures looking to stop the spread have severely affected the economy of the UK. In fact, the country observed the deepest recession this spring, witnessing a significant 20% drop in its GDP during the second quarter.

Despite the economy witnessing fast recovery this summer, estimates from Threadneedle Street suggest that the country’s economic output would be 1.73% lower than the initial national forecast by 2023.

Source credit: https://www.theguardian.com/politics/2020/nov/23/no-deal-brexit-to-cost-more-than-covid-bank-of-england-governor-says

About Author

Pankaj Singh

Pankaj Singh

Endowed with a post graduate degree in management and finance, Pankaj Singh has been a part of the online content domain for quite a while. Having worked previously as a U.K. insurance underwriter for two years, he now writes articles for fractovia.org and other online portals. He can be contacted at- [email protected] | https://twitter.com/PankajSingh2605

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