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Still one-in-four chance of no-deal Brexit, say economists: Reuters poll

By Jonathan Cable

 

An anti-Brexit placard is fixed to traffic barriers opposite the Houses of Parliament in London, Britain, October 9, 2018. REUTERS/Simon Dawson/Files

 

LONDON (Reuters) - There is still a one-in-four chance Britain and the European Union part ways in less than six months without reaching a deal, according to a Reuters poll taken as EU leaders prepare to meet in Brussels later this week.

 

The stubborn problem of resolving the United Kingdom's post-Brexit land border with Ireland thwarted an effort over the weekend to clinch a deal before this week's EU summit as negotiators admitted defeat after marathon talks.

 

Both sides want to finalise talks by mid-November to give parliaments in London and Brussels time to approve a deal before Britain otherwise crashes out in March, an outcome that would plunge businesses and millions of citizens into a chaotic and costly legal limbo.

 

British Prime Minister Theresa May faces stiff opposition at home and abroad to her plans and is struggling with deep divisions in her own party. Boris Johnson, her former foreign minister and figurehead of Britain's Brexit campaign, said talks were "now entering the moment of crisis".

 

May said on Monday she continues to believe a deal is achievable and real progress had been made in recent weeks on both the withdrawal agreement and future relationship. She also said progress had been made on Northern Ireland, the UK's only land border with the EU.

 

When asked what probability they attached to the likelihood of a disorderly Brexit - where no divorce deal is reached - economists questioned largely before the talks hit an impasse gave a median 25 percent, unchanged from a September poll. The highest forecast was 80 percent.

 

"A deal is still more likely than not," said Kallum Pickering at Berenberg. "At any rate, the range of possible outcomes remains wide. But then again, did anyone seriously think this would be a walk in the park?"

 

The most likely eventual outcome is the two sides reaching a free trade agreement, the poll taken Oct. 9-15 found, as has been predicted since Reuters first began polling on this two years ago.

 

In second spot was leaving without an agreement and trading under basic World Trade Organization rules. Holding in third place was Britain belonging to the European Economic Area, paying to maintain full access to the EU's single market.

 

Keeping its position as least likely was Brexit being cancelled. No respondent pegged this as most likely.

 

HOLDING PATTERN

With little clarity as to how Britain will part ways with the EU, the respondents did not expect the Bank of England to adjust monetary policy until after March's departure.

 

They forecast that it would lift the Bank Rate by 25 basis points to 1.0 percent in the second quarter of next year and follow that up with a matching increase in early 2020.

 

British inflation jumped after the Brexit vote, mostly driven by a slump in sterling, and is not expected back at the BoE's 2 percent target until late next year. It will average 2.5 percent this year and 2.1 percent next, the poll said.

 

Growth will remain robust, albeit slower than expected for Britain's peers. The UK economy is predicted to expand 1.3 percent this year, 1.5 percent in 2019 and 1.6 percent in 2020, the poll of over 80 economists found.

 

When asked about the chance of a recession in the coming year, economists collectively gave it a relatively low 20 percent. That rose to 25 percent when asked about the coming two years.

 

"Unless the Brexit negotiations collapse, the likelihood of a full-blown recession remains low," said Peter Dixon at Commerzbank.

 

(Polling by Sujith Pai and Indradip Ghosh; Editing by Mark Heinrich)

 

-- © Copyright Reuters 2018-10-16

 

[dunroaming]

Listening to May in the Commons yesterday, it seems that she is still trying to achieve the same agenda she was a year ago even though it has been flatly rejected by the EU and most of her own government.  It is clear her plan doesn't work and she has to go to the table with something that will.  She cannot deliver what she promised and needs to face that now.  Maybe she is hoping someone will make a leadership bid and she can dump the poisoned chalice, but I can't see that happening with the cowardly bunch who are heckling from the side lines.

[bristolboy]

I don't see why economists would have a special insight into how the negotiations might fare.

And I did find this paragraph rather odd

"Growth will remain robust, albeit slower than expected for Britain's peers. The UK economy is predicted to expand 1.3 percent this year, 1.5 percent in 2019 and 1.6 percent in 2020, the poll of over 80 economists found."

[dunroaming]

It's all speculation until a deal/no deal is done.  We really do have to wait and see where we are at the death.

[sawadee1947]

I'm really fed up with those Cherry picking Brits. 

Take EU's offer or leave it. 

[zaZa9]

7 hours ago, bristolboy said:

I don't see why economists would have a special insight into how the negotiations might fare.

And I did find this paragraph rather odd

"Growth will remain robust, albeit slower than expected for Britain's peers. The UK economy is predicted to expand 1.3 percent this year, 1.5 percent in 2019 and 1.6 percent in 2020, the poll of over 80 economists found."

 

Funny , isnt it ?

80 economists agree that UK business will Grow !

'Business' has always told us plebs , "Let business run free , and business will inevitably bring wealth to all."

 

Ok , let UK business show us what its got.

Im tired of hearing from the European camp ...

They're like a jilted wife ... "GO ... no stay ! Stay and do what I say ! Ok , go then , you'll be sorry. Go on , go , suffer the consequences ... or you can stay but my lawyer said you HAVE to take this."

Nasty biatches with short memories...

 

The UK always had an EU.

It was called the Commonwealth .. a huge trading block.

Let the UK go  and see them again ... theres plenty of un-monopolised trading nations out there ...

[sammieuk1]

How to shoot yourself in the foot only to find your gun is the wrong way round and now you have a pound75p sized hole in your face???? 

[bristolboy]

9 minutes ago, zaZa9 said:

 

Funny , isnt it ?

80 economists agree that UK business will Grow !

'Business' has always told us plebs , "Let business run free , and business will inevitably bring wealth to all."

 

Ok , let UK business show us what its got.

Im tired of hearing from the European camp ...

They're like a jilted wife ... "GO ... no stay ! Stay and do what I say ! Ok , go then , you'll be sorry. Go on , go , suffer the consequences ... or you can stay but my lawyer said you HAVE to take this."

Nasty biatches with short memories...

 

The UK always had an EU.

It was called the Commonwealth .. a huge trading block.

Let the UK go  and see them again ... theres plenty of un-monopolised trading nations out there ...

Really? The EU someetimes pleadis with the UK to stay? Is that consistent with complaints from the UK that the EU is being intransigent? 

 

As for the Commonwealth. What is there about these diverse nations that will give the UK some kind of advantage? Because they were once ruled by it? Trade is governed by economic logic. What has the UK got that they aren't already getting elsewhere or already getting from the UK? 

[Basil B]

7 hours ago, bristolboy said:

I don't see why economists would have a special insight into how the negotiations might fare.

And I did find this paragraph rather odd

"Growth will remain robust, albeit slower than expected for Britain's peers. The UK economy is predicted to expand 1.3 percent this year, 1.5 percent in 2019 and 1.6 percent in 2020, the poll of over 80 economists found."

Yes, more like trying to influence the outcome.