A no-deal Brexit will seriously undermine the fragile recovery of the British economy from the corona crisis. Credit rating agency Moody’s writes this in a report. For the time being, Moody’s thinks that Britain and the European Union can close a limited Brexit deal before the end of this year, but the chances of a hard Brexit are increasing.
London and Brussels are still discussing a new trade relationship, but there seems to be little progress. The British have already left the EU, but are still bound by EU rules this year. Moody’s says the UK economy has entered the deepest recession in nearly a century due to the corona crisis and that a no-deal Brexit will weaken the country’s resilience to economic shocks.
The sectors most affected by a no-deal Brexit are, according to Moody’s, the automotive industry, aviation, ports and chemicals, including due to supply disruptions, production disruptions and already weak demand due to the corona crisis.
The Organization for Economic Co-operation and Development (OECD) reported on Wednesday that Britain will face serious blows to the labor market and trade if a Brexit deal is not reached or the transition period is not extended before the end of this year, something London is increasingly has ruled out.
The OECD also announced that the crisis is projected to shrink the UK economy by 11.5 percent this year, with growth of 9 percent expected in 2021. If there is a second corona wave, the UK economy may shrink by 14 percent this year, the OECD believes, up 5 percent next year. The organization says the uncertainties surrounding Britain’s economy are further compounded by risks of a no-deal Brexit.
In addition, a report by financial experts was released on Wednesday calling for further deepening of the cooperation of capital markets in the EU, also in order to better compete with the important financial markets of the London City. Closer cooperation should also help overcome the corona crisis.