DAVOS, Switzerland (AFP) — The International Monetary Fund said Monday it was “imperative” to resolve the uncertainty surrounding how Britain will leave the European Union, which it said was posing a threat to the British and global economy.
“We have already seen the negative effect of this uncertainty on British investment,” IMF chief economist Gita Gopinath told reporters in Davos ahead of the opening of the World Economic Forum. “It is imperative for leaders to resolve this uncertainty immediately.”
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”, she said.
“So that would be quite significant. It is absolutely essential that this uncertainty is resolved sooner than later,” she said.
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 percent projected in October. And for 2020 the estimate was trimmed to 3.6 per cent.
While it cut forecasts for a number of national economies, it forecast 1.5 per cent 2019 growth for Britain, the same as in October.
But it warned the estimate is fraught with uncertainty since “as of mid-January, the shape that Brexit will ultimately take remains highly uncertain”.
London and Brussels have spent the best part of two years working on a divorce deal, but members of Britain’s lower House of Commons comprehensively rejected Prime Minister Theresa May’s proposed deal last week.
She will unveil a “Plan B” on Monday, but 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.