IMF: UK economic growth dependent on orderly Brexit

The UK economy is set to enjoy steady growth over the next two years as long as Britain’s departure from the European Union goes smoothly, the International Monetary Fund said today. 

The global finance watchdog published its latest world economic outlook report and it paints a positive, if underwhelming, picture for Britain in 2020 and 2021. 

It suggests that the UK economy will grow by 1.4 per cent this year before a slight uptick to 1.5 per cent next year. 

However, the statistics come with the major caveat of the UK avoiding a rough exit from the EU. 

Britain is due to leave the bloc on January 31 at 11pm when it will then enter into a standstill transition period which will come to an end in December. 

During that period the two sides will try to hammer out the terms of their future relationship. 

Boris Johnson has ruled out any extension to the transition period and believes a complete trade deal can be agreed by the end of the year. 

But EU chiefs do not believe there is enough time to agree everything by December, raising the prospect of the UK and Brussels going their separate ways with only a partial agreement in place.

That could jeopardise the growth projected by the IMF. 

It said in its latest report that there must be a ‘gradual transition’ to new trading terms in order to ensure a positive outlook. 

‘In the United Kingdom, growth is expected to stabilize at 1.4 percent in 2020 and firm up to 1.5 percent in 2021 – unchanged from the October WEO,’ the IMF said.

‘The growth forecast assumes an orderly exit from the European Union at the end of January followed by a gradual transition to a new economic relationship.’ 

The IMF’s new world economic outlook report suggests that global growth will rise from an estimated 2.9 per cent in 2019 to 3.3 per cent in 2020 and 3.4 per cent in 2021.