With Boris Johnson confirmed as the next leader of the Conservative Party and British prime minister, the outlook for the British economy has certainly become murkier — and potentially more perilous, the Associated Press reported. His comprehensive victory over Jeremy Hunt has made it more likely that Britain could leave the European Union on Halloween without a withdrawal agreement, a prospect that even the most ardent Brexit believers concede would be disruptive in the short-term before any benefits start to manifest. Most economists think a so-called “no-deal” Brexit will be a lot worse than that. A deep recession is widely predicted for that scenario. Whether it would be as deep as the one that followed the global financial crisis — more than 6 percent — no one knows, but almost all economists agree that jobs will be lost and that public finances will get stretched. A “no-deal” Brexit effectively means that on Nov. 1, tariffs will be slapped on traded goods between the U.K. and the remaining 27 EU countries. Other impediments to trade will have to be imposed, and Britain would also face the prospect of losing the trade deals the EU has struck over the years. Though both sides of the English Channel will suffer in a “no-deal” scenario, Britain would suffer relatively more given that British exports to the EU account for around 13 percent of the country’s annual GDP, versus 2.5 percent of the EU’s.
