The U.K government failing to come up with a trade deal with the European Union after the Brexit might bring catastrophic damage to the economy more than any other situation in the past.
Experts at Goldman Sachs clearly warned the British government that a no-deal with EU will be more costly than a pandemic, reported CNBC Tuesday. The investment bank’s economists expressed the words, “two to three times larger” than that of “the worst pandemic witnessed in post-war history.”
Experts also believe that both side exporters will lose if no trade deal is the outcome. Since the U.K economy is already hit by the Coronavirus pandemic it might be difficult to understand the source of actual pain after the Brexit talks.
I’m afraid that next year (the performance of the U.K. economy) is going to be even worse.
– Anatole Kaletsky. FOUNDER AND CO-CHAIRMAN OF GAVEKAL RESEARCH
However, the Goldman Sachs economists are certain that the Brexit negotiation related economic fallout will obscure the pandemic depressions.
They also added that Brexit talk outcomes should impact important sectors like chemicals, textiles, and electrical equipment businesses.
But the Coronavirus only shocked the food, drink, and wholesale businesses so far.
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Why the Brexit Trade Talks Are in Doubt?
Earlier, the British government tried to choose a controversial bill that created the circumstances for breaking the trade negotiations, according to the latest reports.
The U.K government also tried to enforce plans to change the legally-binding Brexit agreements with Brussels. This made the other party outrages and forced them to threaten the U.K with ultimatums.
However, U.K showed no interest to respond against the ultimatum.
According to the Office for National Statistics, the U.K economy was expanded by 6.6% in July. The data released last week also showed three months of repeated growth until July.
But the office also warned the authorities that the U.K. “has still only recovered just over half of the lost output caused by the coronavirus.”
The unemployment rate was also showing a 0.3% increase in July on a year-to-year basis. So it should be interesting to see the British government violating the Brexit commitments despite an early warning by the economists.
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