Britain’s economy will shrink if the country leaves the European Union next year without a Brexit deal IMF Managing Director Christine Lagarde said.
The IMF said it expected Britain’s economy would grow by about 1.5 percent a year in 2018 and 2019 if a broad Brexit agreement was struck, compared with about 1.75 percent if it had stayed in.
Mlle Lagarde, who was presenting the IMF annual report on Britain’s economy, added: “A more disruptive departure will have a much worse outcome.
“Let me be clear, compared with today’s smooth single market, all the likely Brexit scenarios will have costs for the economy and to a lesser extent as well for the EU.
“The larger the impediments to trade in the new relationship, the costlier it will be. This should be fairly obvious, but it seems that sometimes it is not.”
Britain is due to leave the EU in March next year. Although insiders leaked information today that a basic deal had been done and would be announced at special meeting in November.
Prime Minister Theresa May is hoping to make further progress towards this deal when she meets fellow EU leaders this week.
But the IMF said there was a “daunting” range of issues still to be dealt with before Brexit.
Stronger-than-expected data last week showed the British economy had its fastest growth in nearly a year, helped by the World Cup and hot summer weather.
Chancellor Philip Hammond, speaking alongside Lagarde, said the government had to heed the “clear warnings” from the IMF of a no-deal Brexit.
Mr Hammond has been criticised by some Brexit supporters who say he wants to maintain a relationship with Brussels that would keep Britain under too much influence from the EU.