With Boris Johnson confirmed as the next leader of the Conservative Party and British prime minister, the outlook for the British economy has certainly become murkier — and potentially more perilous.
Johnson's comprehensive victory over Jeremy Hunt has made it more likely that Britain could leave the European Union on Halloween without a withdrawal agreement, a prospect that even the most ardent Brexit believers concede would be disruptive in the short-term before any benefits start to manifest.
Most economists think a so-called "no-deal" Brexit will be a lot worse than that.
A deep recession is widely predicted for that scenario. Whether it would be as deep as the one that followed the global financial crisis — more than 6% — no-one knows, but almost all economists agree that jobs will be lost and that public finances will get stretched.
A "no-deal" Brexit effectively means that on Nov. 1, tariffs will be slapped on traded goods between the U.K. and the remaining 27 EU countries. Other impediments to trade, including on Britain's crucial financial services sector, will have to be imposed, such as new restrictions on the movement of people, customs and regulatory standards. Britain would also face the prospect of losing the trade deals the EU has struck over the years, including recent ones with Canada, South Korea and Japan — these account for around 11% of U.K. trade.
Richard Branson, the Virgin Group founder whose career has taken him from owning a record label to planning flights to space, thinks it will be a disaster — so much so that the pound will slump in value to be worth just a dollar for the first time ever. The pound has borne the brunt of Brexit uncertainty, falling more than 10% from $1.50 on the day after the June 2016 referendum. It's near two-year lows at $1.2450 as the "no-deal" talk escalates.
Though both sides of the English Channel will suffer in a "no-deal" scenario, Britain would suffer relatively more given that British exports to the EU account for around 13% of the country's annual GDP, versus 2.5% of the EU's.
Planning for a "no-deal" Brexit, which Johnson is expected to accelerate in his first days in 10 Downing Street, will help marginally.
Measures such as stockpiling medicines, sourcing more products from outside the EU or modifying road links in southeast England around the port of Dover to manage freight traffic can help, but only up to a point.
"Planning is unlikely to do much to mitigate the short-term disruption of 'no deal'," said John Springford, deputy director at the Centre for European Reform.
For one, he said, there is "too little time to build new border and road infrastructure to reduce congestion at the Dover-Calais crossing and on the M20 motorway in Kent." That raises the stakes for companies like the operator of the Channel Tunnel, which said Tuesday that a "no-deal" Brexit was now the main scenario in its earnings forecasts.
In his pitch to become prime minister, Johnson said he wants a deal but that he would make sure Britain leaves the bloc on Oct. 31, the revised Brexit date after the initial March 29 deadline was extended following the British Parliament's rejection of Theresa May's withdrawal agreement. That dealt with citizens' rights, Britain's financial obligations to the EU following 46 years of membership and making sure no hard border emerges between EU member Ireland and Northern Ireland, which is part of the U.K. The EU has said a deal is a pre-requisite before discussions can commence on a wide-ranging trade pact.
With parliament seemingly opposed to "no-deal," many Brexiters have promoted the idea that Johnson suspend parliament so Brexit just happens. The implications of such a move would be unpredictable. It could lead to civil unrest and a surge in Scottish nationalism, in addition to the instant economic hit. Johnson has said he doesn't want to go down that path but hasn't ruled it out.
Given these uncertainties, business executives are unsure how to plan and have reined in investment over the past two years. That's one of the main reasons why Britain's economy has stuttered and talk of a recession has grown.
"With economic growth already faltering, a disorderly 'no-deal' Brexit could cause widespread disruption to trade, a sharply lower exchange rate, higher inflation and lower living standards," said Arno Hantzsche and Garry Young of the National Institute of Economic and Social Research.
Most forecasters concur with that analysis so it would be a big step for Johnson to back such a move, without a mandate — in the Brexit referendum of June 2016, talk of a "no-deal" Brexit was confined to the periphery of the Leave campaign.
Johnson could therefore push for a general election in the fall after what many expect to be a failed attempt at renegotiating May's withdrawal agreement. With opinion polls showing Britain's electorate split across multiple parties, all bets are off on the outcome and whether any incoming government backs another referendum to reverse the initial result.
Johnson could equally opt to ditch his "do-or-die" pledge with regard to an Oct. 31 Brexit and seek another extension, giving him time to put a crowd-pleasing tax-cutting budget in place for an election next year.
Whatever happens — and given this is Brexit, anything can and probably will — the British economy is set to remain stuck in the mud for months to come.
Whether it sinks will hinge on the decisions Johnson makes in his first weeks in power.
Follow AP's full coverage of Brexit at: https://www.apnews.com/Brexit
PARIS (AP) —
Reuters photographer Mohammed Salem captured this year’s prestigious World Press Photo of the Year award Thursday with a depiction of loss and sorrow in Gaza, a heartrending photo of a Palestinian woman cradling the body of her young niece. The photograph, taken in Khan Younis just days after Salem’s own child was born, shows 36-year-old Inas Abu Maamar holding five-year-old Saly, who was killed along with her mother and sister when an Israeli missile struck their home.
Salem, who is Palestinian, described this photo filed Nov. 2 last year, as a “powerful and sad moment that sums up the broader sense of what was happening in the Gaza Strip.”
The image ”truly encapsulates this sense of impact,” said global jury chair Fiona Shields, The Guardian newspaper's head of photography. “It is incredibly moving to view and at the same time an argument for peace, which is extremely powerful when peace can sometimes feel like an unlikely fantasy,” she added.
The World Press Photo jury praised the shot’s sense of care and respect and its offering of a “metaphorical and literal glimpse into unimaginable loss.”
This is not the first time Salem has been recognized for his work on the Israeli-Palestinian conflict; he received a World Press Photo award more than a decade ago for another depiction of the human toll of conflict in the Gaza strip.
In the three other global categories announced Thursday, South Africa’s Lee-Ann Olwage won Photo Story of the Year for her touching series “Valim-babena,” featured in GEO magazine. The project focused on the stigmatization of dementia in Madagascar, a topic she explored through intimate portraits of “Dada Paul” and his family. Lack of public awareness surrounding dementia means that people displaying symptoms of memory loss are often stigmatized.
In the series, “Dada Paul,” who has lived with dementia for 11 years, is tenderly cared for by his daughter Fara. One of the standout images in the series shows him preparing for church with his granddaughter Odliatemix, capturing moments of normalcy and warmth amidst the challenges of dementia.
Photographer Alejandro Cegarra, a Venezuelan native who migrated to Mexico in 2017, won the Long-Term Project award for “The Two Walls,” published by The New York Times and Bloomberg. Cegarra’s project, initiated in 2018, examines a shift in Mexico’s immigration policies, which have moved from being historically open to enforcing strict regulations at its southern border. The jury said the photographer's perspective as a migrant gave it a “sensitive," human-centered perspective, according to a press release.
Julia Kochetova of Ukraine won the Open Format award for “War Is Personal.” The project stood out from coverage of the ongoing conflict by offering a personal look at the harsh realities of war. On a dedicated website, she merged traditional photojournalism with a diary-like documentary style, incorporating photography, poetry, audio clips and music.
The Associated Press won the Open Format award in the regional Africa category with the multimedia story “Adrift,” created by journalists Renata Brito and Felipe Dana. The story investigates the fate of West African migrants who attempted to reach Europe via a treacherous Atlantic route but ended up on a ghost ship discovered off Tobago. The team’s compelling use of photography, cinematography and detailed narrative, enhanced by expert design and multimedia elements, highlights the perils faced by migrants and the human stories behind global migration issues.
The Associated Press' Ebrahim Noroozi won the Asia Stories award for his series “Afghanistan on the Edge,” which documents the country since the Taliban took over in August 2021.
World Press Photo is an independent, nonprofit organization based in the Netherlands, founded in 1955.
This image provided by World Press Photo is part of a series titled Afghanistan on the Edge by Ebrahim Noroozi, Associated Press, which won the World Press Photo Asia Series category and showsAn Afghan refugee rests in the desert next to a camp near the Torkham Pakistan-Afghanistan border, in Torkham, Afghanistan, Friday, Nov. 17, 2023. A huge number of Afghans refugees entered the Torkham border to return home hours before the expiration of a Pakistani government deadline for those who are in the country illegally to leave or face deportation. (AP Photo/Ebrahim Noroozi)
This image provided by World Press Photo is part of a series titled Afghanistan on the Edge by Ebrahim Noroozi, Associated Press, which won the World Press Photo Asia Series category and shows : Since the chaotic Taliban takeover of Kabul on Aug. 15, 2021, an already war-devastated economy once kept alive by international donations alone is now on the verge of collapse. There isn't enough money for hospitals. The World Health Organization is warning of millions of children suffering malnutrition, and the U.N. says 97% of Afghans will soon be living below the poverty line. Three Afghan internally displaced children look with surprise at an apple that their mother brought home after begging, in a camp on the outskirts of Kabul, Afghanistan, Thursday, Feb 2, 2023. (AP Photo/Ebrahim Noroozi)
This image provided by World Press Photo is part of a multimedia project by Associated Press' Renata Brito and Felipe Dana titled Adrift, won the World Press Photo Africa Regional Winner Open Format category and shows a mortuary technician opening the door of a refrigerator used to store the remains of migrants recovered from inside the Mauritania boat that appeared drifting near the island of Tobago, in Scarborough, Trinidad and Tobago, Tuesday, Jan. 25, 2022. In May 2021 a boat from Mauritania full of dead men was found off the coast of the Caribbean Island of Tobago. Who were these men and why were they on the other side of the Atlantic Ocean? Two visual journalists sought answers, uncovering a story about migrants from West Africa who seek opportunity in Europe via an increasingly popular but treacherous Atlantic route. (AP Photo/Felipe Dana)
This image provided by World Press Photo is part of a multimedia project by Associated Press' Renata Brito and Felipe Dana titled Adrift, won the World Press Photo Africa Regional Winner Open Format category and shows young fishermen walk into the ocean to board an artisanal fishing boat in Nouakchott, Mauritania, Friday, Dec. 10, 2021. In May 2021 a boat from Mauritania full of dead men was found off the coast of the Caribbean Island of Tobago. Who were these men and why were they on the other side of the Atlantic Ocean? Two visual journalists sought answers, uncovering a story about migrants from West Africa who seek opportunity in Europe via an increasingly popular but treacherous Atlantic route. (AP Photo/Felipe Dana)
This image provided by World Press Photo is part of a multimedia project by Associated Press' Renata Brito and Felipe Dana titled Adrift, won the World Press Photo Africa Regional Winner Open Format category and shows Moussa Sako, an asylum-seeker from Mali, who survived 22 days aboard a Mauritanian boat drifting in the Atlantic Ocean covers his face during an interview with the Associated Press in Guadalajara, Spain, Sunday, Nov. 14, 2021. In May 2021 a boat from Mauritania full of dead men was found off the coast of the Caribbean Island of Tobago. Who were these men and why were they on the other side of the Atlantic Ocean? Two visual journalists sought answers, uncovering a story about migrants from West Africa who seek opportunity in Europe via an increasingly popular but treacherous Atlantic route. (AP Photo/Felipe Dana)
This image provided by World Press Photo and taken by Julia Kochetova is part of a series titled War is Personal which won the World Press Photo Open Format Award. Amidst tens of thousands of civilian and military casualties and an effective stalemate that has lasted for months, there are no signs of peace on the horizon for Russia's war in Ukraine. While news media updates its audience with statistics and maps, and international attention drifts elsewhere, the photographer has created a personal website that brings together photojournalism with the personal documentary style of a diary to show the world what it is like to live with war as an everyday reality. (Julia Kochetova/World Press Photo via AP)
This image provided by World Press Photo and taken by Julia Kochetova is part of a series titled War is Personal which won the World Press Photo Open Format Award and shows a stabilization point near Bakhmut, Ukraine, of the 5th assault brigade and 77th brigade. Hospitalliers battalion - volunteer battalion of combat medics are helping here. Amidst tens of thousands of civilian and military casualties and an effective stalemate that has lasted for months, there are no signs of peace on the horizon for Russia's war in Ukraine. While news media updates its audience with statistics and maps, and international attention drifts elsewhere, the photographer has created a personal website that brings together photojournalism with the personal documentary style of a diary to show the world what it is like to live with war as an everyday reality. (Julia Kochetova/Der Spiegel/World Press Photo via AP)
This image provided by World Press Photo and taken by Julia Kochetova is part of a series titled War is Personal which won the World Press Photo Open Format Award and shows the training of mobilized conscripts of 68th brigade in Donetsk region, not far from frontline. 68th brigade recently liberated Blagodatne village during the Ukrainian counter-offensive. The instructors came from US, working for NGO "Saber".Amidst tens of thousands of civilian and military casualties and an effective stalemate that has lasted for months, there are no signs of peace on the horizon for Russia's war in Ukraine. While news media updates its audience with statistics and maps, and international attention drifts elsewhere, the photographer has created a personal website that brings together photojournalism with the personal documentary style of a diary to show the world what it is like to live with war as an everyday reality. (Julia Kochetova/Der Spiegel/World Press Photo via AP)
This image provided by World Press Photo and taken by Alejandro Cegarra for The New Times/Bloomberg is part of a series titled The Two Walls which won the World Press Photo Long-Term Project Award and shows Carlos Mendoza, a Venezuelan migrant, crossing the Rio Grande river to seek asylum in the United States. Piedras Negras, Mexico, 7 October 2023. (Alejandro Cegarra/The New York Times/Bloomberg/World Press Photo via AP)
This image provided by World Press Photo and taken by Alejandro Cegarra for The New Times/Bloomberg is part of a series titled The Two Walls which won the World Press Photo Long-Term Project Award and shows a migrant walking atop a freight train known as "The Beast." Migrants and asylum seekers lacking the financial resources to pay a smuggler often resort to using cargo trains to reach the United States border. This mode of transportation is very dangerous; over the years, hundreds have fallen onto the tracks and have been killed or maimed. Piedras Negras, Mexico, 8 October 2023. (Alejandro Cegarra/The New York Times/Bloomberg/World Press Photo via AP)
This image provided by World Press Photo and taken by Lee-Ann Olwage for GEO is part of a series titled Valim-babena which won the World Press Photo Story of the Year Award and shows Dada Paul Rakotazandriny (91), who is living with dementia, and his granddaughter, Odliatemix Rafaraniriana (5), get ready for church on Sunday morning at his home in Antananarivo, Madagascar. 12 March 2023. (Lee-Ann Olwage/Geo/World Press Photo via AP)
This image provided by World Press Photo and taken by Lee-Ann Olwage for GEO is part of a series titled Valim-babena which won the World Press Photo Story of the Year Award and shows Joeline (Fara) Rafaraniriana (41) watches her father, Dada Paul Rakotazandriny (91) clean fish at home on Sunday afternoon. A typical Sunday consists of the family attending church in the morning and spending time together in the afternoon. Fara works during the week and as the sole provider and carer for her daughter and father struggles to manage all her responsibilities in the absence of assistance by her siblings who live close by. Mandrosoa Ivato, Antananarivo, Madagascar. 12 March 2023. (Lee-Ann Olwage/Geo/World Press Photo via AP)
This image provided by World Press Photo and taken by Mohammed Salem of the Reuters news agency won the World Press Photo Award of the Year and shows Palestinian woman Inas Abu Maamar, 36, embracing the body of her 5-year-old niece Saly, who was killed in an Israeli strike, at Nasser hospital in Khan Younis in the southern Gaza Strip, October 17, 2023. (Mohammed Salem/Reuters/World Press Photo via AP)
