KPMG forecasts no-deal Brexit recession in 2020

KPMG forecasts no-deal Brexit recession in 2020

Britain could plunge into its first recession in a decade should the government quit the EU without a deal, according to the latest in a string of gloomy forecasts made by the Bank of England and the Treasury’s independent forecasting unit, the Office for Budget Responsibility.

Economists at the accountancy firm, KPMG said that the effects to Britain’s trade and business confidence of a no-deal Brexit would lead to the economy shrinking by 1.5% next year. Consumer spending, which has provided between 60% and 80% of growth in the economy over the last three years, would also be heavily affected.

Yael Selfin, KPMG UK’s chief economist, said she expected that in every quarter of next year the economy would contract, leading to the first recession since 2009 and the aftermath of the financial crisis.

The economy has already slowed in recent months, with only the services sector continuing to expand, according to official figures. An industry survey by business advisers, BDO found that optimism in the sector fell dramatically last month as the prospect of a recession became a possibility.

A survey of more than 4,000 services firms found that optimism was now at levels not seen since 2013.