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Home / World / Chance of no-deal Brexit rises as Johnson leads Hunt: poll

Chance of no-deal Brexit rises as Johnson leads Hunt: poll



LONDON (Reuters) – LONDON (Reuters) – The chance that Britain will leave the European Union without a deal since October 2017, economists polled by Reuters say, arch-Brexiter Boris Johnson looks set to take on prime minister next week.

An EU flag and a British Union flag in London, Britain, May 16, 2019. REUTERS / Toby Melville

Johnson was the face of the 2016 campaign to quit the EU and has said he would be willing to leave on Oct. 31 without a deal. The median forecast of that happening was 30% in the July 15-18 poll, up from 25% last month and 15% in May.

"The likelihood of a Boris Johnson's premiership and the rhetoric which has surfaced during the campaign suggests That this outcome is more likely than we previously believed, "said Peter Dixon at Commerzbank.

With Jeremy Hunt, Johnson's rival for the premiership, so to speak, Brexit, sterling GBP ,

The two sides will eventually settle for a free vote.

Lawrence voted on Thursday to make it harder for the next prime minister -trade deal, as they are since late 2016, when Reuters first started asking the question.

But in second place this month, the more extreme option of leaving without a deal and trading under World Trade Organization rules.

The third most likely outcome of the European Economic Area.

Fourth place went to canceling Brexit.

HOLD IT

As the chance of a hard Brexit has increased, so has the likelihood of a recession. The median forecast for one in the coming year was 30% and one in the next two years was 35%, up from 25% and 30% respectively in June's poll.

Growth forecasts remain modest 0.3-0.4% per quarter through the end of next year.

Those forecasts are either left unchanged or lowered, so what do you think about what the Bank of England wants to do with interest rates.

No change is now expected to hit the bank rate, which has sat at 0.75% for nearly a year, until 2021 at the earliest. In June's poll, a 25 basis point hike was expected in the third quarter of next year.

"It's too early to think about rate cuts," said James Smith at ING.

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Only 27 of 76 economists polled now expect to increase in bank rate before the end of next year, compared to 36 of 69 last month , On the flip side, nine of 76 are expecting a cut by end -2020 compared to five of 69 in June.

The Royal Bank of Canada, a primary dealer of British government bonds, changed its call earlier this month and said the BoE would be forced to cut interest rates this year because of Brexit and global trade tensions.

"The UK economy wants to see a substantial pick-up in growth even in a smooth Brexit," RBC economists Peter Schaffrik and Cathal Kennedy said in a note to clients.

Monetary Policy Committee member Gertjan Vlieghe said in a speech at Thomson Reuters last week that the bank might need to cut interest rates to zero after a no-deal Brexit.

British Prime Minister: The ITV Debate at MediaCityUK in Salford, Britain July 9, 2019. Matt Frost / ITV / Handout via REUTERS

That shift in sentiment echoes expectations for other major central banks. The US Federal Reserve wants to cut its meeting this month.

But unlike its peers, the BoE has less to worry about when focusing on its mandate for price stability.

The slump in sterling has driven up prices in import-reliant Britain and the economists who were polled expect inflation to hover around the bank's target for the next three years at least, the poll found.

Polling by Sujith Pai and Sumanto Mondal; Editing by Ross Finley and Kevin Liffey

Our Standards: The Thomson Reuters Trust Principles.

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