Macroscope | Brexit plus the coronavirus pandemic could prove too much for Britain
- Higher trade tariffs and disruptions to supply chains due to a no-deal Brexit might push British manufacturers to relocate
- The risk of an entrenched depression is real, and neither Europe nor China would come to the UK’s rescue
The country is already heading for its worst recession in 300 years, according to the Bank of England, and a hard Brexit shock could be the last straw, hurling the economy into a long-lasting depression. If that happens, unemployment will surge, social divisions will deepen and the pound could collapse under the weight of a British crash.
There is still time to pull back from the brink, but compromise will be needed.
Britain’s economy is in very poor shape and can ill-afford any more setbacks. Last week’s British growth data showed that output collapsed by 20.4 per cent in April after a 2 per cent drop in the first quarter, as the impact of the lockdown and factory closures paralysed the economy. There seems little chance of the economy getting back on its feet before hard Brexit hits at the end of the year.
For many firms struggling to keep their heads above water through the crisis, the chaos of a no-deal break-up with Europe may be too much to bear.