Britain’s economic growth will be the joint worst in Europe by next year even if it does leave the EU with a deal, according to European Commission forecasts.
The UK will initially share the bottom of the league table for the continent’s worst economic growth with Italy, but will soon sit at the foot of the table alone.
The Commission’s forecast is based on the assumption that the UK will leave from the EU with a ‘soft Brexit’ deal by the departure date of March 29 next year.
Consumer spending is also predicted by the Commission to be weak, as it has been for two years and business investment will also remain low.
Demand for UK goods abroad will fall, leading to predicted GDP growth of just 1.2 per cent in 2019 and 2020.
The downbeat predictions came as warnings were issued over the risks to the economies of all 27 EU member states from a hard Brexit and other factors.
Experts at the International Monetary Fund say that the UK leaving without a deal, increased global trade disputes and the Italian government debt crisis would further hit growth.
The IMF says any Brexit outcome will have a negative effect, but that no deal would do the biggest damage.
Talks on a Brexit deal between the UK and EU are at a critical stage, with both sides giving different accounts of how they are progressing.
Prime Minister Theresa May and her Brexit Secretary Dominic Raab insist a deal is “95 per cent” done, but EU chief negotiator Michel Barnier appears less optimistic.
The sticking point to any deal is the issue of the Irish backstop, which aims to ensure there is no return to a hard border between Northern Ireland and the Republic.
The backstop would be activated if no trade deal is in place by the end of the transition period on December 31, 2020, or if it a deal does not include an open border.
Among a number of backstop options discussed is a plan for the entire UK to remain aligned to the EU customs union on a temporary basis.
This would avoid the requirement for customs checks, which it is feared could threaten the Northern Ireland peace process and hurt businesses on both sides of the border.
But Mrs May’s Brexit ‘Chequers plan’ and the backstop proposals are under fire from all sides, including Tory Brexiteers and Northern Ireland’s Democratic Unionist Party.
Her former Brexit Secretary David Davis said Mrs May will “probably” lose a crucial Commons vote on any Brexit deal she presents.
