Budget watchdog says no-deal Brexit will spur UK recession

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Budget watchdog says no-deal Brexit will spur UK recession

2019-07-18 19:36 Last Updated At：19:50

The U.K. will plunge into recession if it leaves the European Union without a divorce deal, with the pound plunging in value and the economy shrinking by 2% in a year, Britain's official economic watchdog said Thursday.

The Office for Budget Responsibility made its assessment as chances of an economically disruptive no-deal Brexit appear to be rising. Both men vying to take over next week as Britain's prime minister, Boris Johnson and Jeremy Hunt, say they will lead the U.K. out of the bloc, with or without an agreement on terms.

They claim that Britain can withstand any resulting turbulence, but most economists predict the economic shock would be severe.

The OBR, which provides the U.K. government with independent economic forecasts, said a no-deal Brexit would see "heightened uncertainty and declining confidence deter investment, while higher trade barriers with the EU weigh on exports."

It predicted GDP would fall by 2% by the end of 2020 in a no-deal scenario, and borrowing would be around 30 billion pounds ($37 billion) a year higher from 2020-21 than it forecast in March.

Britain is due to leave the EU on Oct. 31, but Parliament has repeatedly rejected the divorce deal truck between Prime Minister Theresa May and the bloc. Johnson and Hunt, who are vying to replace May as Conservative party leader and prime minister, both say they will leave without an agreement if the EU won't renegotiate.

The bloc insists it won't change the 585-page withdrawal agreement, which sets out the terms of Britain's departure and includes a transition period of almost two years to allow both sides to adjust to their new relationship.

"This document is the only way to leave the EU in an orderly manner," EU Brexit negotiator Michel Barnier told the BBC in an interview broadcast Thursday.

Three years after British voters narrowly chose to leave the 28-nation EU, it remains stuck in limbo. May announced her resignation last month after failing to win Parliament's approval for her Brexit deal.

Her successor is being chosen by members of the Conservative Party, most of whom are strongly in favor of Brexit and prepared to accept the risks of leaving without a deal. Johnson is the strong favorite to win the contest when the result is announced Tuesday.

He claims that Britain can flourish outside the EU if it has enough optimism and "mojo," and says a no-deal Brexit will be "vanishingly inexpensive" if the country prepares properly.

Many others are less sanguine.

Treasury chief Philip Hammond, who has warned about the perils of a no-deal Brexit — and is likely to be fired by the next prime minister — said "I greatly fear the impact on our economy and our public finances" of a no-deal Brexit.

He said the OBR forecast was based on the "most benign version" of a no-deal Brexit, and in all likelihood "the hit would be much greater, the impact would be much harder."

Meanwhile, the relationship between the British government and the EU has been frayed by years of testy negotiations and allegations of ill-will on both sides.

EU Commission Vice-President Frans Timmermans told a BBC documentary that the British lacked a plan and were "running around like idiots" during the Brexit negotiations. He cited a catchphrase from the classic British sitcom "Dads' Army": "Don't panic!"

Junior U.K. Brexit minister Martin Callanan accused Timmermans of spreading "childish insults" about the British negotiating stance. Quoting another famous riposte from "Dad's Army," he said Timmermans was a "stupid boy."

Follow AP's full coverage of Brexit and the Conservative Party leadership race at: https://www.apnews.com/Brexit

EU, Britain and Spain say significant progress made in talks on post-Brexit status of Gibraltar

2024-04-12 23:26 Last Updated At：23:31

MADRID (AP) — British and Spanish foreign ministers said a new round of talks held Friday over the status of the disputed territory of Gibraltar following Britain’s exit from the European Union were productive and significant progress was made.

The meeting was between Spain's José Manuel Albares, Britain’s David Cameron and European Commission Vice-President Maros Sefcovic in Brussels. Gibraltar Chief Minister Fabian Picardo also attended. It was the first time representatives from the four areas had come together for talks on the issue.

In a statement after the meeting, the parties said "discussions took place in a constructive atmosphere, with significant progress achieved.

“General political lines have been agreed (on), including on airport, goods and mobility. Negotiations will continue over the coming weeks to conclude the EU-UK Agreement,” it added.

All sides are eager to clinch a deal before European elections in June.

Britain left the European Union in 2020 with the relationship between Gibraltar and the bloc unresolved. Talks on a deal to ensure people and goods can keep flowing over the Gibraltar-Spain border have made halting progress in the 19 rounds of negotiations so far, but both Spanish and U.K. officials have recently expressed optimism about a deal.

In Britain’s 2016 Brexit referendum, 96% of voters in Gibraltar supported remaining in the EU. The tiny territory on Spain's southern tip depends greatly on access to the EU market for its 34,000 inhabitants.

Gibraltar was ceded to Britain in 1713, but Spain has maintained its sovereignty claim ever since. Relations concerning the Rock, as it is popularly referred to in English, have had their ups and downs over the centuries.

A major sticking point has been who controls Gibraltar’s airport, which under the proposed free-movement deal would be an external border of the EU. The U.K. and Gibraltar have resisted Spain’s insistence that Spanish border officials be based at the airport, which is also home to a Royal Air Force base.

The British Foreign Office said Thursday that while it did not expect a final agreement Friday, "getting senior political figures from the UK, European Commission, Spain and Gibraltar in one room is significant.”

Associated Press writer Jill Lawless reported from London.