Skip to content
Search

Latest Stories

"No Brexit deal will hurt global economy"

by LAUREN CODLING

BRITAIN needs to come to a decision over Brexit as it poses a threat to the UK and global economies, a leading economic expert has said, as the UK government remains in political deadlock since MPs rejected prime minster Theresa May’s withdrawal deal last Tuesday (15).


Gita Gopinath, the chief economist of the International Monetary Fund (IMF), made the comments on Monday (21), stating it was “essential” that a conclusion was reached.

“We have already seen the negative effect of this uncertainty on British investment,”

Gopinath told reporters in Davos, Switzerland, ahead of the opening of the World Economic Forum summit.

“It is imperative for leaders to resolve this uncertainty immediately.”

The Indian-American economist said the IMF had already calculated that if Britain crashed out of the EU without a deal the result would be “a decline in long run... GDP of five to eight per cent”.

After her initial deal was rejected last week, Theresa May unveiled a new “Plan B” on Monday.

However, fears are growing that Britain will crash out of the EU on March 29 unless MPs can force a delay or come up with an alternative plan that Brussels is also happy with before the deadline.

The prime minister has confirmed she will be organising further talks with Brussels to try to salvage the Brexit deal.

MPs are due to debate next Tuesday (29) on the government’s proposed Brexit plan.

Gopinath’s comments came after the IMF released an update to its global economic forecast, showing that a range of uncertainties, including Brexit but also US-China trade confrontations, were threatening to drag down global growth even further.

The World Economic Outlook cut the global GDP forecast for this year to 3.5 per cent from the 3.7 per cent projected in October.

And for 2020 the estimate was trimmed to 3.6 per cent.

While it cut forecasts for several national economies, it forecast 1.5 per cent 2019 growth for Britain, the same as in October.

Lord Swraj Paul, an industrialist and founder of the Caparo Group, agreed with Gopinath’s comment.

Describing it as a “sad situation…and very un-British,” the peer said he doubted anyone was proud of the Brexit outcome so far.

“The government is doing whatever it can to sort it out, but it is a strange situation,” Lord Paul told Eastern Eye on Tuesday (22).

“Parties are fighting among themselves, not even against the opposition. But I have no doubt that it will get sorted out.”

The industrialist, who believes a second referendum would be a “mistake”, added he did not think delaying the deadline would make a difference.

“It would be a waste of time,” he said. “We must act mature and get on with it.”

Lord Jitesh Gadhia also concurred with Gopinath’s comments about the impact of uncertainty.

Speaking from the World Economic Forum in Davos on Tuesday (22), he said the global economy is facing “several headwinds” – ranging from a slowdown of the Chinese economy to trade tariff disputes to quantitative tightening of monetary policy.

“The more we can take uncertainties like Brexit off the table, the better the prospects for business confidence and long-term investment,” the investment banker told Eastern Eye.

Josh Hardie is the deputy director-general of the Confederation of British Industry (CBI).

Responding to Gopinath’s comments, he described the projected impact on the UK economy as “devastating”.

“While business will do [everything] it can to reduce some of the worst aspects, a no-deal scenario is unmanageable,” Hardie said.

Subsequent to the “historic” defeat in parliament, Lord Karan Bilimoria, the founder and chairman of Cobra Beer, believes the negotiations should be put on hold and a so-called People’s Vote should be held.

According to the founding chairman of the UK-India Business Council, figures show that the

UK economy could be 3.9 per cent smaller after 15 years under the prime minister’s Brexit plan, compared with staying in the EU.

The British pound has also lost 12 per cent of its value since May 2016.

Lord Bilimoria also highlighted a CBI estimate which showed that a no-deal Brexit could shrink the UK economy by 9.3 per cent over the same period.

“[This is] a catastrophic scenario which would have a deep impact on our neighbours and trading partners,” Lord Bilimoria said.

Describing Gopinath’s comments as “spot on”, he added that the uncertainty over the UK’s future and the fear of a no deal Brexit have caused foreign direct investment in the UK to halt.

“The UK has already tumbled from being the fastest-growing economy in the Western hemisphere in February 2016 to having the lowest growth forecasts over the next five years ever, at two per cent,” he noted.

He added: “For partners like India where the UK is the largest foreign investor in the G20 – accounting for nearly five per cent of total foreign direct investment (FDI) – this is very bad news indeed. Virtually no country in the world wants the UK to leave the EU.”

Also sharing Gopinath’s sentiments is Dr Rami Ranger CBE. The Sun Mark founder, who had backed May’s Brexit deal, said it would be in the interest of the world’s economy that a deal be struck between the UK and EU.

In this ever-shrinking world, he said, no country can avoid impacting many other nation’s economically with its own economic conditions.

“The economies of more and more countries are becoming increasingly interlinked,” he explained.

“For example, many countries have invested in the UK with the view to accessing the European single market, and if these countries cannot trade freely with Europe, then this will impact many other countries in the global economy.”

(With agencies)

More For You

ve-day-getty

VE Day 80 street parties, picnics and community get togethers are being encouraged to take place across the country as part of the Great British Food Festival. (Photo: Getty Images)

Public invited to attend VE Day 80 procession and flypast

THE 80th anniversary of Victory in Europe (VE) Day will be marked with a military procession in London on May 5.

The event will include over 1,300 members of the Armed Forces, youth groups, and uniformed services marching from Parliament Square to Buckingham Palace.

Keep ReadingShow less
Knife crimes

Knife-enabled crimes include cases where a blade or sharp instrument was used to injure or threaten, including where the weapon was not actually seen.

Getty Images/iStockphoto

Knife crime in London accounts for a third of national total: ONS

KNIFE-RELATED crime in London made up almost a third of all such offences recorded in England and Wales in 2024, with the Metropolitan Police logging 16,789 incidents, according to figures released by the Office for National Statistics (ONS) on Thursday.

This amounts to one offence every 30 minutes in the capital and represents 31 per cent of the 54,587 knife-enabled crimes reported across England and Wales last year. The total number marks a two per cent rise from 53,413 offences in 2023.

Keep ReadingShow less
Starmer and Modi

Starmer and Modi shake hands during a bilateral meeting in the sidelines of the G20 summit at the Museum of Modern Art in Rio de Janeiro, Brazil Brazil, on November 18, 2024.

Getty Images

Starmer calls Modi over Kashmir attack; expresses condolences

PRIME MINISER Keir Starmer spoke to Indian prime minister Narendra Modi on Friday morning following the deadly attack in Kashmir’s Pahalgam region that killed 26 people on Tuesday.

According to a readout from 10 Downing Street, Starmer said he was horrified by the devastating terrorist attack and expressed deep condolences on behalf of the British people to those affected, their loved ones, and the people of India. The two leaders agreed to stay in touch.

Keep ReadingShow less
 Post Office Horizon

A Post Office van parked outside the venue for the Post Office Horizon IT inquiry at Aldwych House on January 11, 2024 in London, England. (Photo: Getty Images)

Getty Images

Post Office spent £600m to keep Horizon despite plans to replace it: Report

THE POST OFFICE has spent more than £600 million of public funds to continue using the Horizon IT system, according to a news report.

Despite deciding over a decade ago to move away from the software, the original 1999 contract with Fujitsu prevented the Post Office from doing so, as it did not own the core software code, a BBC investigation shows.

Keep ReadingShow less
Pahalgam attack: Prayer meet held at Indian mission in London

The prayer meet was led by Indian High Commissioner to the UK Vikram Doraiswami

Pahalgam attack: Prayer meet held at Indian mission in London

Mahesh Liloriya

A PRAYER meet was held at the Gandhi Hall in the High Commission of India in London on Thursday (24) to pay respects to the victims of the Pahalgam terrorist attack.

Chants of ‘Bharat Mata Ki Jai’ rang out at the event which was led by Indian High Commissioner to the UK Vikram Doraiswami.

Keep ReadingShow less