No-deal Brexit to hurt UK the most: EU

Brexit turmoil pushes Britain towards economic recession

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VIENNA/ LONDON
A no-deal Brexit would hurt Britain more than the rest of Europe no matter how much Prime Minister Boris Johnson’s government pretends otherwise, outgoing European Commission President Jean-Claude Juncker said in remarks published on Saturday.
Britain has been pressing the European Union to amend the terms of Britain’s withdrawal agreement, saying Brussels would have to take responsibility for a no-deal Brexit if it does not compromise. But at the end of the day that would do the most harm to Britain, Juncker told a regional newspaper in the Austrian province of Tyrol, where he regularly spends his summer holiday.
If it comes to a hard Brexit that is in no one’s interest, but the British would be the big losers. They are acting as though that were not the case but it is, Juncker told the Tiroler Tageszeitung newspaper. We are fully prepared even though some in Britain say we are not well set up for a ‘no deal’. But I am not taking part in these little summer games,”said Juncker, who is due to be succeeded by German conservative Ursula von der Leyen once she has put together her Commission.
The European Union has said the withdrawal agreement negotiated by the previous British administration led by Theresa May will not be re-opened. Johnson says it wants a key element of that deal, the so-called Irish backstop, to be scrapped. The backstop, agreed between Brussels and May’s government, aims to keep the border between the Republic of Ireland and British-ruled Northern Ireland open, and would effectively keep Northern Ireland within the EU’s single market if no alternative arrangement can be found.
We have made clear that we are not prepared to hold new negotiations on the withdrawal agreement but only to make certain clarifications in the framework of the political declarations.
that regulate future relations between the United Kingdom and European Union, Juncker said. We are well prepared (for no deal) and I hope the British are too.
Meanwhile, official data has shown that Britain’s economy unexpectedly shrank in the second quarter of the year on Brexit turmoil, placing the country on the verge of a recession. Gross domestic product (GDP) fell 0.2 percent in the April-June period, the first time the economy has contracted in almost seven years, the Office for National Statistics (ONS) said.
The data, which was worse than market expectations for zero growth, sent the pound sliding against the euro and dollar. The latest reading contrasted with a 0.5 percent expansion in the first quarter, when activity was boosted by companies stockpiling ahead of Brexit.
Economic activity was buoyed in the first three months because Britain had initially been scheduled to leave the EU at the end of March. GDP contracted in the second quarter for the first time since 2012 after robust growth in the first quarter, said Rob Kent Smith, head of GDP at the ONS.
Manufacturing output fell back after a strong start to the year, with production brought forward ahead of the UK’s original departure date from the EU. The construction sector also weakened after a buoyant beginning to the year, while the often-dominant service sector delivered virtually no growth at all, he added.
Another contraction in the current third quarter would put Britain in official recession, ahead of the nation’s expected EU withdrawal at the end of October. British Prime Minister Boris Johnson replaced Theresa May in July after winning the governing Conservatives’ leadership contest on a pledge to take Britain out of the bloc with or without a divorce deal on October 31.
The latest look at the UK economy makes for pretty grim viewing, said XTB analyst David Cheetham. Given the growing threat of a no-deal Brexit that looms menacingly overhead, it would not be at all surprising if the current quarter also shows a contraction — therefore meeting the standard definition of a recession. The government’s official forecaster last month warned that Britain would slide into a year-long recession should it leave the EU without a deal.

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