(Bloomberg) -- The International Monetary Fund added its voice to calls for U.K. Prime Minister Theresa May to strike a Brexit deal with the European Union.
All options for leaving the EU involve costs, but departing without a deal would inflict “substantial costs for the U.K. economy, and to a lesser extent the EU economies -- particularly if it were to occur in a disorderly fashion,” the Washington-based IMF said in its Article IV annual health check on the U.K. Until a deal is reached, Brexit uncertainty is likely to weigh on investment, the IMF said.
The organization is predicting growth of about 1.5 percent this year and next -- a forecast based on a timely trade pact and a relatively smooth exit process thereafter. A more disruptive departure could lead to “a significantly worse outcome,” the IMF said.
In a joint press conference with the IMF’s managing director Christine Lagarde following the publication, U.K. Chancellor Philip Hammond said that Britain must heed the body’s warnings, and it was vital that the nation reaches a Brexit agreement. A no deal outcome was unlikely but not impossible, he said.
The IMF’s warnings over a disorderly Brexit come just days after Bank of England governor Mark Carney joined a Cabinet meeting that was convened to discuss planning for what happens if Britain crashes out of the bloc without a deal. The Canadian outlined worst-case scenarios used by the central bank, including house prices tumbling, a falling pound and higher trade tariffs.
