Post Brexit economy to ‘hold up well’

Brexit may hit UK economic growth, but it will hold up well compared to other advanced economies, investment bank Berenberg’s UK economist has predicted.

Delivering a keynote during our most recent London event Kallum Pickering forecasted that a hit on growth will be most limited in the event of the UK adopting a so called ‘Norway’ model for its future relationship with the EU.

He reckoned that in this scenario, whereby the UK would remain in the EU single market but outside its political structures, growth would fall to 1.9% compared to a pre-referendum average of 2.1%, and if the UK opted for continued customers union membership, growth would fall to an average of 1.7%, and to 1.5% in the event of a hard Brexit. [emaillocker id=”71749″]

Pickering said: “The UK still looks in pretty good shape despite Brexit. Brexit is a bad policy but not the end of the world. 1.7% is pretty good for an advanced European economy. We see Brexit as a choice to have chronic illness, you are going to walk a bit slower unless we do other stuff to make things better.”

He said the key factors influencing Berenberg’s post-Brexit economy forecasts are the impact of the EU withdrawal will have on immigration and investment flows.

Any tightening of labour supply, the expansion of which has contributed around half of UK growth in recent years, will be the main factor limited the UK economy’s potential post-Brexit growth, but the impact of Brexit on growth could be compounded by the elected of a Labour Government, Pickering warned.

Predictions of a Venezuela-style economic collapse following the entry of a Jeremy Corbyn led Government are ‘insane’ he said. But its fiscal policy would fuel inflation while increased regulation would undo the economic reforms introduced by Thatcher’s Government, limiting the economy’s growth potential and increased unemployment. Pickering said: “On top of Brexit, it would be a big whack that we could do without.” [/emaillocker]