Impact of a no-trade-deal Brexit will be limited

Our baseline forecast assumes that the UK and the EU will strike a limited free-trade agreement that will keep bilateral trade tariff- and quota-free, while limiting the non-tariff barriers (NTBs) to a degree. But given the fractious negotiations over the past months, we acknowledge the probability of a ‘no-trade-deal’ outcome is still elevated – we estimate it as high as 40%.In this report, we will present you with in-depth analysis which will allow you to learn:

  • After months of negotiations, the outcome of EU-UK trade talks seems
    imminent. While our baseline forecast envisages a deal will ultimately be
    concluded, we estimate the probability of the two sides failing to reach an
    agreement is as high as 40%.
  • The additional downside for the eurozone of a no-trade-deal outcome is limited. We estimate GDP would be 0.3% lower by 2022 than in our baseline forecast, while real exports would be 0.6% lower.
  • But the context matters. For economies already ravaged by the coronavirus crisis, missing out on a trade deal could add further challenges. France, Spain, Italy, and Portugal appear the most vulnerable. For export industries, transport, manufacturing, and beverages and tobacco are likely to be worst affected.

Topics: Brexit, Global trade, Macro, Real Estate

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