The head of the International Monetary Fund (IMF) has warned of "dire consequences" if the UK leaves Europe without a deal. In the latest of its assessments, IMF managing director Christine Lagarde said that all likely Brexit scenarios would "entail costs for the UK economy", but that a disorderly departure could lead to "a significantly worse outcome". While new trade agreements made possible by EU withdrawal "could eventually pare some of these losses for the UK", any such deals are "unlikely to bring sufficient benefits to offset the costs imposed by leaving the EU", the international economic think-tank said. Ms Lagarde said the UK economy was likely to be weaker under any likely scenario, while a disorderly, no-deal Brexit would have serious consequences. "If that happened, there would be dire consequences. It would inevitably have consequences in terms of reduced growth, an increase in the [budget] deficit and a depreciation of the currency," she said. "In relatively short order, it would mean a reduction in the size of the economy." The IMF noted that "fundamental questions", particularly on the Irish Border, remain to be answered in order to secure a smooth Brexit. It warned: "Resolving these issues is critical to avoid a no-deal Brexit on World Trade Organisation terms that would entail substantial costs for the UK economy - and to a lesser extent the EU economies - particularly if it were to occur in a disorderly fashion." The report warned that the UK still faced a "daunting" list of tasks to prepare for Brexit and was unlikely to have completed the task by departure day on March 29, 2019, even with "the most determined efforts". The report was launched by Ms Lagarde alongside British Chancellor Philip Hammond at the Treasury in London. The IMF urged the UK authorities to prepare policies to "safeguard macroeconomic and financial stability" in the case of a chaotic Brexit. Mr Hammond said the report underlined the need for a Brexit deal to ensure the economic gains of the past decade were not lost. "We are at a critical juncture for the UK economy. Despite the contingency actions we are taking, leaving without a deal would put at risk the substantial progress the British people have made over the last 10 years," he said. The report said the Treasury and Bank of England should be prepared for the possibility of "sharp declines in sterling and other asset prices" and the bank should be ready to act to ensure the financial system has adequate liquidity. Ministers may have to use the flexibility available to them to boost economic activity by bringing forward major infrastructure projects. But any easing of fiscal policy - for example, by cutting interest rates to stimulate the economy - would have to be temporary and introduced as part of a "credible" longer-term plan to keep debt under control. Irish Independent
A no-deal Brexit will result in "dire consequences" for the UK, including reduced growth, an increased budget deficit and a depreciation of the pound, according to Christine Lagarde, the managing director of the International Monetary Fund (IMF). The IMF said that if Britain left without any deal, it would be "a very serious blow not only to our economy but also to confidence around the world."