UK faces deep recession without Brexit deal

LONDON (AP) - The Bank of England has warned that the British economy could shrink by a massive eight percent in a matter of months if the country leaves the EU without a deal next year, and that unemployment could nearly double.

In an analysis requested by British lawmakers, the central bank simulated a worst-case scenario involving Britain crashing out of the European Union in March 2019 with no deal on future relations like trade, and no transition period to help businesses adapt.

A recession on that scale would be Britain’s deepest in modern history and far beyond the one experience after the global financial crisis a decade ago.

The bank predicts inflation would rise to almost seven percent next year as import prices rise following a collapse in the value of the pound. House prices are estimated to fall by 30 percent.

It said the financial sector could withstand the shock as banks have built up capital buffers.

The bank assumed a number of worst-case scenarios in its prediction, including the imposition of tariffs and other barriers to trade on all trade with the EU.

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