LONDON - The British economy will considerably worsen in the event of a no-deal Brexit, the Institute for Fiscal Studies (IFS), a London-based independent economic research institute, said on Tuesday.
The economy would be "considerably worse, even under a relatively benign scenario," according to the IFS Green Budget 2019, associated with Citi, and the charitable trust Nuffield Foundation.
The IFS assumed that under the no-deal Brexit, interest rates would be cut and "private consumption and investment growth falls while net trade is also a drag on growth."
Meanwhile, it predicted that if Britain continued to delay Brexit, there would be "a further fiscal loosening of between 1 and 2 percent of GDP. There would be a chance of small rate cuts."
The body stated that "securing a Brexit deal would be better for the economy over the next two to three years than another delay," adding that "some pent-up investment should occur, and consumer confidence would improve, as the risk of a no-deal Brexit recedes."
The research said that British gross domestic product (GDP) "is roughly 2.5 to 3.0 percent (55 to 66 billion pounds or 67 to 81 billion U.S. dollars) below where we think it would have been without Brexit."
Based on pre-crisis forecasts and global economic performance in 2017 and 2018, "we suspect the UK has missed out almost entirely on a bout of global growth, which would normally have boosted exports and investment," the study showed.
A growth recovery would require "a profound reduction in policy uncertainty," the IFS noted, adding that "without investment and improvements in labor productivity, growth is likely to slow further."