London - United Kingdom (CNN)
The United Kingdom is due to leave the European Union on March 29, 2019, amid expectations that the failure of the agreement between the two parties will lead to a scenario of economic disruptions, while an agreement will reduce damage to the economy.
Economists at UBS said their view of Britain's economy was "dual, warning that trade disruptions due to the EU's unregulated exit would" plunge the UK into a recession, "while a deal would delay tough decisions and inspire certainty in the business community.
Prime Minister Teresa Mae has already reached an exit deal with the European Union, but faces strong opposition in parliament, and British lawmakers are expected to vote on the deal next month.
Recession fed by Breaksite
The exit from the EU is expected to suddenly lead to a disaster for companies in the UK, which will face a new business and uncertain legal environment, which was warned by major business groups, and stressed that many companies are unwilling to deal with The chaos of leaving the EU without an agreement.
"The UK will have only time to re-establish hundreds of international and regulatory trade treaties to which it is a party because of its membership in the European Union," said Andrew Goodwin, associate director at Oxford University.
Government studies predict that the UK economy will shrink by 7.7% 15 years after Britain came out of the EU in an unregulated way compared to maintaining current trade arrangements. The damage will be greater if immigration from the EU falls.
Damage will appear quickly
Capital Economics expects the UK's unregulated exit to shrink the economy by 0.2% in 2019, and the company is likely to drop the pound to $ 1.12 against the dollar, compared to $ 1.26 now.
According to Oxford Economics, the British economy will shrink by 2.1% by the end of 2020 if a deal is agreed upon between the parties
While the UK economy will be worse off under all the British exit scenarios being studied by the government, an agreement with the EU on how to leave and future trade arrangements will provide certainty for companies that spent the last two years in the dark on future terms of trade with the EU. British legislators work to approve the Teresa-May agreement.
The high levels of uncertainty contributed to a major slowdown in the British economy in the second half of 2018. Consumer spending and commercial investment have been very successful since electing voters to leave their largest trading partner in 2016.
"Although long-term risks to potential UK growth from Britain's exit from the EU are on the horizon, the prospect of a deal represents a significant upside potential for the UK economy in the medium term," said Kalom Pickering, chief economist at Bernberg.
Companies that were at high risk, such as automakers, would see the biggest benefits from the deal, according to Peking, and wages would also increase at a faster pace.
Going out in accordance with the May package or withdrawing without it is not the only option. There are two other scenarios that would leave the UK economy better off than the unregulated British exit - postponing the exit or renouncing it altogether.