GlobalData’s “Summary of Brexit Forecasts” provides an overview of third party forecasts for the short- and long-term impact on the UK’s GDP of leaving the EU, based on different scenarios for the final settlement negotiated by the UK. It also summarizes third party forecasts for the impact on the GDP of EU member states, the US, and China.

The UK’s decision to leave the EU has sparked considerable uncertainty over the short- and long-term impacts on the UK economy. In the run-up to the referendum, a number of organizations, including banks, government departments, and think tanks, produced forecasts that attempted to model the impact of Brexit on the UK’s GDP. GlobalData has compiled these forecasts to act as guide for your own planning and decision-making.

The brief offers insight into –
– The short-term impact on the UK’s GDP while the UK negotiates its departure from the EU.
– How the longer-term impact on the UK economy will vary depending on the level of access it retains to the Single Market.
– The knock-on effect on the GDP of the remaining EU member states, the US, and China.

Scope

Analysis by HM Treasury shows that the UK is likely to enter a recession encompassing four successive quarters of negative growth during 2016-17. Inflation and unemployment will rise, while real wages and house prices will fall. Under the “shock” scenario, GDP will be 3.6% below the baseline forecast by 2018, and 6.0% lower under the “severe shock” scenario.

According to the International Monetary Fund’s “limited” scenario, where the UK assumes membership of the EEA, consumer and producer confidence remain relatively unaffected, with GDP predicted to be 1.4% below baseline by 2012. Under its “adverse” scenario, negotiations fail, leading to the UK defaulting to WTO trading rules. Here, the UK’s GDP will be 4.5% below baseline by 2021.

BertelsmannStiftung has forecast the impact of EEA- and WTO-type deals for the wider EU economy. Under both scenarios, Ireland will suffer the greatest impact, due to it having the strongest trading links with the UK.

Reasons to Buy

Understand how much the UK will be affected in the short-term, while its exit from the EU is being negotiated.

Understand how much the UK’s economy could be affected in the longer-term and how this will depend upon the shape of the final settlement.

Learn how the wider global economy will be affected by Brexit.

Table of Contents

Table of Contents

1. SUMMARY OF BREXIT FORECASTS 4

1.1. Most forecasters offer a range of outcomes 4

1.1.1. EEA membership offers the greatest degree of continuity 4

1.1.2. A WTO arrangement is the worst-case outcome 5

1.2. Main GDP forecasts for the UK 5

1.2.1. International Monetary Fund 5

1.2.2. HM Treasury 6

1.2.3. PwC 8

1.2.4. Organisation for Economic Co-operation and Development 8

1.2.5. Centre for Economic Performance 9

1.2.6. Institute for Fiscal Studies 10

1.3. Impact on EU GDP 12

1.3.1. BertelsmannStiftung 12

1.3.2. Deutsche Bank 13

1.3.3. OECD 14

1.4. Impact on US GDP 14

1.5. Impact on China GDP 15

2. APPENDIX 16

2.1. Abbreviations and acronyms 16

2.2. Bibliography 16

2.3. Further reading 16

List of Tables

List of Tables

Table 1: IMF forecasts for impact of Brexit on UK GDP, 2016–21 6

Table 2: HM Treasury forecasts for quarterly GDP growth, Q3 2016–Q2 2018 7

Table 3: HM Treasury 15-year forecasts for impact of Brexit on GDP – deviation from baseline 7

Table 4: PwC forecast for impact of Brexit on UK GDP, 2020–30 8

Table 5: OECD forecasts for impact of Brexit on GDP – deviation from baseline 9

Table 6: CEP forecasts for impact of Brexit on UK GDP – deviation from baseline 10

Table 7: IFS summary of forecasts for impact of Brexit on UK GDP in 2030 – deviation from baseline 11

Table 8: BertelsmannStiftung summary of forecasts for impact of Brexit on EU and global GDP per capita in 2030 – deviation from baseline 12

Table 9: Deutsche Bank summary of forecasts for impact of Brexit on EU GDP in 2016–17: deviation from baseline 13

Table 10: OECD forecasts for impact of Brexit on GDP – deviation from baseline 14

Table 11: Forecasts for growth in US GDP in 2016, pre- and post-Brexit 14

Table 12: Forecasts for growth in China’s GDP in 2016, pre- and post-Brexit 15

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