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UK employers defy approach of Brexit with hiring spree

UK employers ramped up their hiring at the fastest pace since 2015 in the three months to January as the labour market defied broader Brexit weakness in the overall economy.

The number of people in work surged by 222,000, helping to push the unemployment rate down to its lowest since the start of 1975 at 3.9 percent, official data showed.

The increase in hiring was stronger than all forecasts in a Reuters poll of economists and pushed the proportion of the population in work to an all-time high.

The pound rose slightly after the data.

The surprising resilience of the labour market and the subsequent rise in wage growth, plus a fall in inflation, are cushioning the Brexit uncertainty for many households, whose spending drives the economy.

However, the surge in jobs could reflect nervousness among businesses who have scaled back on investment in equipment, making them more likely to hire workers who can be sacked if the economy sours.

An employers group said on Monday that companies were set to cut investment by the most in 10 years in 2019 because of Brexit, even if Prime Minister Theresa May gets a deal to ease the country out of the European Union.

“There is continued strength in the labour market but we all know that it is a lagging indicator and we shouldn’t get too carried away,” Commerzbank economist Peter Dixon said.

“There have to be questions about how long the labour market can continue at this pace.”

The Bank of England forecasts that Britain’s economy will grow at its slowest rate in a decade this year.

Private surveys have suggested employers turned more cautious in February as May struggled to get parliament behind her deal.

Brexit is now expected to be delayed beyond the scheduled date of March 29.

Firms in Britain’s dominant services sector cut staffing at the fastest rate in more than seven years in February, according to a purchasing managers’ survey published two weeks ago.

A survey of recruiters also published earlier this month showed employers held off from hiring permanent staff in February.

But for now, the strength of the labour market is pushing up the official measurement of wages more quickly.

Total earnings, including bonuses, rose by an annual 3.4 percent in the three months to January, the Office for National Statistics said, stronger than a median forecast of 3.2 percent in the Reuters poll.

Wage growth for the three months to December was revised up slightly to 3.5 percent, its highest since mid-2008.

Average weekly earnings, excluding bonuses, also rose by 3.4 percent on the year, in line with the Reuters poll.

The Bank of England has said it will need to raise interest rates gradually to offset inflation pressures from rising pay, but is expected to keep interest rates on hold at its next policy announcement on Thursday due to Brexit uncertainty.

Last month, the BoE forecast wage growth would slow to 3.0 percent by the end of 2019 as the economy feels the drag of Brexit uncertainty and a global slowdown, then pick up again.

The pace of wage rises remains slower than the 4 percent increases seen before the financial crisis.

The ONS released its data before the scheduled 0930 GMT publication time due to an error by the statistics office.

By William Schomberg

Source: UK Reuters

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Brexit delay will keep stranglehold on UK economy, warns former Bank policymaker

Delaying Brexit will consign Britain’s already weak economy to “sluggish” growth and risks a further manufacturing exodus until a deal is struck, a former Bank of England rate-setter has warned.

Ian McCafferty – who sat on the Bank’s Monetary Policy Committee (MPC) for six years until last August – told the Press Association if the EU approves a delay to Article 50 with no clear plan for a deal at the end, the uncertainty will wreak further havoc on the economy.

He said the sharper than-expected slowdown in business investment, which was largely behind the weak growth of 0.2% in the fourth quarter of 2018, would continue as firms halt large-scale strategic investments.

The longer the uncertainty continues, the more it’s clear that businesses are finding it difficult simply to wait

Ian McCafferty, Oxford Economics

In a sobering take on the prospects for the economy, he said small suppliers face the threat of going out of business if large manufacturers start ditching the UK in droves amid political dithering.

He said: “A longer-term delay would continue the issue of business uncertainty and lack of confidence.

“It would probably continue to see the economy grow very sluggishly.”

He added that large firms will be increasingly forced to put contingency plans into place, which may mean more moves to shift production and operations out of the UK.

“The longer the uncertainty continues, the more it’s clear that businesses are finding it difficult simply to wait,” he said.

Mr McCafferty, who joined Oxford Economics as senior adviser last month, said even if a delay of a year or two was accompanied by the prospect of a better Brexit outcome at the end, there would still not be an immediate bounce back in the economy.

Businesses want to see firm details of trading relationships before committing to investment, he said.

“Until the degree of uncertainty is properly resolved and there is much greater clarity on the future of the trading relationship, I’m not sure we’ll see business confidence and business investment rallying dramatically,” he cautioned.

His comments come ahead of the Bank of England’s MPC meeting on Thursday, when it is set to keep interest rates firmly on hold at 0.75% amid the Brexit maelstrom.

Bank governor Mark Carney has also recently warned that delaying Article 50 is not a better option than a deal or transition period, telling MPs earlier this month that uncertainty will linger for at least a year even after an agreement is struck.

Oxford Economics is currently predicting a 60% chance that Prime Minister Theresa May’s deal will eventually go ahead, albeit with amendments.

Given that the MP votes are not yet legally binding, it believes there is still a 35% chance of the UK crashing out without a deal – and a 5% probability of Article 50 being revoked completely.

While a delayed Brexit deal will inflict yet more uncertainty on Britain’s beleaguered businesses, a no-deal outcome would still be a far worse outcome in the short term, said Mr McCafferty.

Oxford Economics is forecasting a no-deal Brexit would wipe at least 2% off gross domestic product (GDP) in the next two years – tipping the UK into recession.

Mr McCafferty said the UK’s already “weak economy” is likely to have eked out growth of just 0.1% to 0.2% in the first quarter of 2019 – a far cry from the 0.6% growth seen last summer amid the heatwave and World Cup boost.

He said the MPC has “limited room for manoeuvre” to boost the economy, with rates already not far off zero and increasing political resistance to further quantitative easing (QE).

Given the “shifting attitudes” to QE, he questions if the Bank could use it again, with politicians blaming it for increasing inequality in the UK since the financial crisis.

But he said the better position in the public finances should allow the Chancellor to use his fiscal firepower to bolster the economy in tandem with monetary policy.

Mr McCafferty – whose new role sees him provide boardroom-level consultancy for large companies on issues such as the economy and Brexit – left the MPC just before the worst of the Brexit turmoil.

But he dismissed suggestions he left at the right time.

He said: “I envy my colleagues who are still on the committee – it’s a fascinating time to be on the MPC.”

Source: iTV

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UK Economy Roars Back to Life in New Year with Strong GDP Beat

– UK economy rebounds with a bang in January as GDP rises 0.5%.

– Rebound more than offsets -0.4% decline seen back in December.

– And may be enough for markets to keep faith with BoE rate hike bets.

The UK economy rebounded from its December slump early in the New Year, according to Office for National Statistics (ONS) figures released Tuesday, and momentum behind the recovery could be enough to ensure financial markets keep faith with hawkish bets about Bank of England (BoE) interest rate policy.

The UK economy grew by 0.5% in January, which more than reverses the -0.4% decline seen back in December, when markets had been looking for only a 0.2% increase in the New Year.

All main sectors of the economy contributed to growth during the January month, with the exception of agriculture, although the standout performer was the construction sector which saw output rise by 2.8%. However, that simply reverses a -2.8% decline from December.

“The larger than expected monthly increase in GDP of 0.5% in January (consensus 0.2%) is a reassuring sign that, up until January at least, the UK economy was weathering the political crisis at home and slowdown overseas pretty well,” says Andrew Wishart, an economist at Capital Economics.

“The rebound in GDP in January, after December’s 0.4% month-to-month drop, is a timely reminder that the PMIs aren’t a reliable indicator of the economy’s momentum when political uncertainty is elevated,” says Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

Tuesday’s report comes after IHS Markit PMI surveys of the services, construction and manufacturing sectors suggested strongly that the economy ground to a halt in January.

Those PMI surveys continued to point toward economic stagnation after ONS data revealed the December GDP contraction, leading to increased speculation that the economy had hit a rough patch just as the March 29, 2019 Brexit day appeared on the horizon.

ONS figures for January show the economy rebounding resolvedly from its December trough but the UK economic picture painted by Tuesday’s numbers is entirely different when viewed over a longer horizon, because GDP grew by just 0.2% for the three months to the end of January.

Above: Sectoral contributions to UK GDP growth on a three-month basis.

Quarterly growth was led by a robust expansion in the services sector but the increase was unchanged from the 0.2% pace of growth seen in the final quarter of 2018 and takes the shine off of Tuesday’s headline.

On a three-month basis the services sector expanded by 0.38% while output from the construction sector declined -0.04% and output from the industrial sector fell -0.12%. However, economists say the pace of growth in the January month alone could be more important for the outlook than the three-month number.

“January’s increase in GDP exceeded even our top-of-the-range 0.4% forecast, so we are revising up our forecast for quarter-on-quarter growth in Q1 to 0.3%, from 0.2%. This implies that little, if any, excess capacity will open up in the first half of the year, giving the MPC little time to delay another rate hike if, as we expect, GDP growth regains some momentum once a Brexit deal has been signed off,” says Tombs.

Tuesday’s data follows a year in which UK GDP grew by just 1.4% after the economy expanded by 0.2% in the final quarter, 0.6% in the third quarter, 0.4% in the second quarter and just 0.1% in the first quarter. That was the weakest expansion since 2012, and one that many economists have attributed to uncertainty over the Brexit process.

First quarter GDP growth has tended to be weak in recent years and given the performance of the economy in 2018, expectations for the New Year period in 2019 have been particularly downbeat. But some economists are telling their clients that Tuesday’s figures could mean this year is different.

“There is no denying that today’s figures suggest the economy is weathering the Brexit storm remarkably well,” says Wishart of Capital Economics. “Of course, the data may deteriorate in February and March if Brexit has caused consumers and firms to reach for the handbrake. But note that even if monthly GDP growth is zero in February and March, the economy would still grow by 0.4% in Q1. As a result, we are happy to stick with our 0.3% q/q forecast.”

UK economy

Above: UK GDP growth trends.

Currency markets care about the GDP data because of what it might mean for Bank of England interest rate policy. Rising demand within an economy can often mean increased inflation pressures, and it is changes in the consumer price outlook that dictate BoE interest rate decisions.

The BoE has raised rates by 25 basis points on two occasions since the referendum in 2016, taking the Bank Rate up to 0.75%, and it’s said repeatedly in recent months that elevated inflation and a robust outlook for consumer price pressures mean it’ll need to keep raising rates in the coming quarters.

However, pricing in the overnight-index-swap market implies a BoE bank rate of just 0.81% for December 19, 2019, which is just 6 basis points above the current cash rate and suggests strongly that investors have only limited appetite for betting on a BoE rate hike coming this year.

The actual Bank Rate that would prevail if the BoE were to hike again is 1%. As a result, there is significant scope for investors to price-in BoE policy action for 2019, which would be positive for Pound Sterling exchange rates if such a thing were to happen.

Many economists say a deal facilitating an orderly exit of the UK from the EU would be enough to persuade the BoE to come off the sidelines and lift its interest rate again.

By James Skinner

Source: Pound Sterling Live

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Brexit fallout on UK finance intensifies – think tank

More than 275 financial firms are moving a combined $1.2 trillion (£925 billion) in assets and funds and thousands of staff from Britain to the European Union in readiness for Brexit at a cost of up to $4 billion, a report from a think tank said on Monday.

UK lawmakers are due to vote on Tuesday on an EU divorce settlement. But with less than three weeks to go before Brexit day on March 29, it is still unclear whether the deal will be approved, whether departure from the EU will be delayed, or whether it will happen without agreement.

The report by the New Financial think tank, one of the most detailed yet on the impact of Brexit on financial services, said Dublin alone accounted for 100 relocations, ahead of Luxembourg with 60, Paris 41, Frankfurt 40, and Amsterdam 32.

The independent think tank said half of the affected asset management firms, such as Goldman Sachs Investment Management, Morgan Stanley Investment Management and Vanguard, had chosen Dublin, with Luxembourg the next port of call, attracting firms like Schroders, JP Morgan Wealth Management and Aviva Investors.

Nearly 90 percent of all firms moving to Frankfurt are banks, while two-thirds of those going to Amsterdam are trading platforms or brokers. Paris is carving out a niche for markets and trading operations of banks and attracting a broad spread of firms.

New Financial identified 5,000 expected staff moves or local hires, a figure that is expected to rise in coming years.

A better measure of Brexit’s impact is the scale of assets and funds being transferred, it said.

Ten large banks and investment banks are together moving 800 billion pounds of assets from Britain – or 10 percent of banking assets in the country. A small selection of insurers have shifted a combined 35 billion pounds in assets, and a handful of asset managers have moved a total of 65 billion pounds in funds.

William Wright, founder and managing director of New Financial, said the hit to London was bigger than expected and would get worse.

“Business will continue to leak from London to the EU, with more activity being booked through local subsidiaries,” Wright said.

“This will reduce the UK’s influence in European banking and finance, reduce tax receipts from the industry, and reduce financial services exports to the EU.”

A 10 percent shift in banking and finance activity would cut UK tax receipts by about 1 percent, the report said.

Relocations have cost firms $3 billion to $4 billion, which will be passed on to customers and shareholders, the report said.

But the breadth and depth of relocations so far, combined with pacts between regulators in Britain and the EU, mean the industry is well prepared for whatever form Brexit takes, New Financial said.

London will remain the dominant financial centre for the foreseeable future, but other European cities will chip away at London’s lead over time, it added.

By Huw Jones

Source: Yahoo Finance

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Unemployment would rise after no-deal Brexit, top economist warns

A no-deal Brexit would be a “sharp shock”, increase unemployment and could shrink the Scottish economy by 7%, Scotland’s top economist warned MSPs.

With just three weeks until the UK is due to leave the EU, the Scottish Government’s chief economic adviser said that they would not be able to mitigate all the damage caused by a no-deal Brexit.

Giving evidence about his report into the economic impact if the UK leaves without an agreement in place, Dr Gary Gillespie told MSPs the Scottish economy would be between 2.5% and 7% lower compared with remaining.

He said: “Despite the best government mitigation, a no-deal would impact a short, sharp shock to the economy.

“With that kind of shock, you would see it manifest in the labour market.

“You would see unemployment – from its record-low level at the moment – beginning to rise as firms respond to the challenge of reduced demand, supplies and cash flows.”

MSPs questioning the economist came away from the Europe Committee no clearer about what plans are in place for a no-deal Brexit.

There’s no published plan as of yet but there’s no published plan at the UK level either

Dr Gary Gillespie

After six questions by Tavish Scott, trying to elicit details about whether the government had a plan for no-deal Brexit and how it would respond, Dr Gillespie said it had not been made public but insisted there was one in place.

He stressed the complexity of response required across all government departments and businesses, saying: “There’s no published plan as of yet but there’s no published plan at the UK level either.”

“There’s a plan in place but the key thing about the plan is that the plan can’t mitigate across all the areas.”

Dr Gillespie added: “What we’ve heard from the UK is that the Bank of England will bring forward particular measures but we haven’t heard much else about what a plan would be.”

MSPs also questioned Dr Gillespie and the Scottish Government’s deputy director of economic analysis Simon Fuller about the impacts of Brexit on people coming to work in Scotland.

Highlighting the damage to tax revenues of reduced immigration, Mr Fuller said: “If you had a 50% fall in EU migration, Scotland’s economy would be about 6% smaller by 2040 than would otherwise be the case if migration continued at the levels we’ve seen over the last five to six years.

“That would mean GDP of £6 billion to £7 billion lower and feeding through to tax revenues of about £2 billion to £3 billion lower.”

Following the committee meeting, Economy Secretary Derek Mackay said: “As a responsible government we have to prepare, as best we can, for all scenarios.

“The Cabinet Secretary for Government Business and Constitutional Relations has confirmed in his detailed statements to Parliament that planning for a no-deal outcome is continuing and intensifying across the organisation, with the Scottish Government Resilience Committee meeting weekly to manage and escalate matters as required.

“A no-deal exit would severely disrupt the flow of goods at UK borders and our preparations include working with transport operators, suppliers and retailers to safeguard as far as possible the continued supply of medicines and food, and engaging with exporters to help manage disruption.

“However, there is only so much we can do and we will not be able to mitigate all of the impacts of a ‘no-deal’ exit in Scotland.”

Scottish Liberal Democrat Europe spokesman Tavish Scott MSP said: “We’re well into March and a no-deal Brexit is a terrifying but genuine possibility. It’s unbelievably frustrating to have to draw information out of government officials like blood from a stone.

“Planning is difficult because no-one knows what a divided Tory government is going to do. But the bottom line is pretty simple. We need to have a plan and it should be publicly available. Available for Scottish business, residents and European citizens who live and work here.

“That is the only way worried citizens can be reassured the government has a grip on what may happen across the Scottish economy.”

Source: Express and Star

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UK economy near standstill as Brexit approaches, surveys show

UK economy came close to stagnating again in February as services companies, preparing for Brexit, cut staff at the fastest rate in more than seven years and consumers reined in their spending, surveys showed on Tuesday.

The figures suggested growth in the world’s fifth-biggest economy was near a standstill as Prime Minister Theresa May tried to win last-minute Brexit concessions from Brussels.

IHS Markit, a data firm, said its UK Services Purchasing Managers’ Index showed Britain’s economy was set to grow by just 0.1 percent in the first three months of 2019 compared with the last three of 2018.

After touching its lowest level in January since immediately after the Brexit referendum in 2016, the services PMI edged up to 51.3 from 50.1. That was better than the median forecast of 49.9 in a Reuters poll of economists.

But Howard Archer, an economist with EY Item Club, a forecasting firm, said the risk was very real that economic growth in the first quarter of 2019 would be weaker than his existing forecast of 0.2 percent.

“There is a genuine chance now that the Bank of England will sit tight on interest rates through 2019 – especially if Brexit is delayed and extends the uncertainty,” he said.

Separate data on Tuesday showed consumers slowed the increase in their spending in February and focused on buying food, including for stockpiling, rather than non-essential items.

Sterling rose initially on the higher-than-expected PMI reading but soon gave up its gains and was down 0.2 percent against the U.S. dollar at $1.3158 at 1125 GMT.

BREXIT NEARS, BUT DELAY POSSIBLE

Britain’s economy defied forecasts of a recession after the 2016 referendum vote to leave the European Union. But growth slowed sharply in late 2018 as worries mounted about the possibility of an abrupt, no-deal Brexit on March 29, and the global economy also weakened.

Carmakers based in Britain fear that their complex supply chains could be damaged by Brexit, and the Bank of England said on Tuesday other European Union countries were not ready for possible financial disruption.

Under pressure from within her Conservative Party, May is still seeking to rework the Brexit deal she agreed with other EU leaders. She has also raised the possibility of a delay of the departure date until June.

IHS Markit said optimism about the year ahead among services — ranging from giant banks to high-street hairdressers — had been lower only at the height of the global financial crisis and immediately after the Brexit referendum.

Many investment decisions were on hold and some companies said European clients were delaying committing to new projects in Britain. New export orders among services contracted for the sixth month in a row.

Companies cut jobs at the fastest pace since November 2011, with many opting not to replace people who left voluntarily.

Some companies said Britain’s low unemployment rate was making it hard to find skilled staff.

IHS Markit said the main positive in February was the weakest increase in costs for services firms since May last year, opening up scope for offering discounts to clients.

By William Schomberg

Source: Yahoo Finance UK

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Brexit woes hits UK services sector

UK services sector output increased marginally in February, Brexit concerns have continued to weigh on the economy and hiring of staff has declined to its fastest pace in seven years.

HIS Markit/CIPS purchase managers index (PMI) showed a reading of 51.3 in February, a reading above 50 indicates growth.

Economist’s expectations were forecast to be 49.8, however recent data suggests the economy is almost stagnant, and on track for its weakest quarter since the last three months of 2012.

Financial services firms have held off hiring staff due to the outlook of the economy, and employment numbers declined at a faster rate since 2012.

Chris Williamson, chief business economist at IHS Markit, which compiled the survey said, “The latest PMI surveys indicate that the UK economy remained close to stagnation in February, despite a flurry of activity in many sectors ahead of the UK’s scheduled departure from the EU.

“The data suggest the economy is on course to grow by just 0.1% in the first quarter.

“Worse may be to come when pre-Brexit preparatory activities move into reverse. Many Brexit-related headwinds and uncertainties also look set to linger in coming months even in the case of PM May’s deal going through.

“Business optimism about the year ahead has consequently sunk to the lowest ever recorded by the survey with the exceptions of the height of the global financial crisis and July 2016.”

Howard Archer, chief economic adviser at Item Club said, “There is a genuine chance now that the Bank of England will sit tight on interest rates through 2019, especially if Brexit is delayed and extends the uncertainty.”

Source: London Loves Business

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Pound falls as PM May tries to clinch Brexit compromise

The pound had gained earlier in the session on signs some pro-Brexit lawmakers were willing to compromise with May, increasing the chances she will get her Brexit deal through parliament next week.

“Despite a strong start for the pound, dismal construction sector data and a strengthening dollar saw sterling drop below $1.32,” said City Index senior market analyst Fiona Cincotta.

Britain’s construction industry reported the first fall in activity in almost a year last month, with the HIS Markit/CIPS Purchasing Managers’ Index (PMI) falling to 49.5 in February from January’s reading of 50.6, although the pound was unmoved after the release.

Media reports over the weekend suggested London was softening its demands of the European Union in renegotiating parts of the Brexit withdrawal deal that is deeply unpopular within large parts of May’s own Conservative party.

The Sunday Times said a group of Brexit-supporting lawmakers who previously rejected May’s deal have set out changes they want to see to her agreement in return for her support.

The British parliament is set to vote on May’s deal next week, although the vote could be held sooner. If it fails to pass, lawmakers will get to vote on whether to delay Brexit, currently set for March 29.

Hopes for a delay to Brexit and bets that a no-deal Brexit is a far less likely outcome sent sterling surging last week as high as $1.3351. The British currency is up 3.7 percent against the dollar so far in 2019 and 4.7 percent versus the euro.

On Monday, though, sterling fell 0.3 percent to $1.3167, its lowest since Feb 26. It traded broadly flat against a weaker euro at 85.92 pence.

While Brexit negotiations dominate the headlines, concerns about a slowdown in the British economy continue to build.

The PMI for Britain’s dominant services sector is published on Tuesday.

Source: UK Reuters

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UK firms report weakest growth since April 2013: CBI

British businesses reported their weakest growth in nearly six years during the past three months due to fears of a no-deal Brexit and rising global trade barriers, the Confederation of British Industry said on Sunday.

The CBI’s index of private-sector activity over the past three months dropped to -3 in February from zero in January.

This was its lowest since April 2013, when Britain was still recovering from the global financial crisis. Firms expected similar weakness in the three months ahead, when Britain is due to leave the European Union after over 40 years of membership.

Prime Minister Theresa May has yet to win parliament’s support for a Brexit transition deal although she has paved the way for a possible delay to Brexit beyond its scheduled date of March 29.

“More and more companies are hitting the brakes on investment and day-to-day business decisions are becoming increasingly problematic,” the CBI’s chief economist, Rain Newton-Smith, said.

A survey last week showed manufacturers stockpiled goods by the most on record for any big advanced economy as they prepared for the possibility of border delays after Brexit.

The Bank of England predicts Britain’s economy will grow by just 0.2 percent in the three months to March and growth in 2019 to be the weakest since 2009, even if Brexit goes smoothly.

Britain’s trading partners in Europe are facing weaker growth too, due to trade tensions between the United States and China that have hurt global manufacturers.

The CBI survey was based on responses from 650 businesses in retail, manufacturing and services.

Source: UK Reuters

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No-deal Brexit would lead to food shortages and cost business billions, government reveals

A no-deal Brexit would lead to food shortages, higher prices in the shops and cost UK firms billions of pounds, a new analysis from the Government has revealed.

Ministers also admitted that up to a third of “critical” infrastructure projects were now behind schedule, partly due to firms failing to view a no-deal scenario as “sufficiently credible”.

Members of the public are also failing to prepare for a no-deal Brexit, according to the 15-page document, which warned that industries like the automotive sector would be “severely” impacted by new tariff and non-tarriff barriers if the Commons does not back the Withdrawal Agreement negotiated by Theresa May.

“In the absence of other action from Government, some food prices are likely to increase, and there is a risk that consumer behaviour could exacerbate, or create, shortages in this scenario. As of February 2019, many businesses in the food supply industry are unprepared for a no deal scenario.”

The stark analysis warned that harsh new customs arrangements would be implemented if the UK is treated as a third country by the EU in the event that no managed exit is agreed between London and Brussels.

“Every consignment would require a customs declaration, and so around 240,000 UK businesses that currently only trade with the EU would need to interact with customs processes for the first time, should they continue to trade with the EU,” they wrote.

“HMRC has estimated that the administrative burden on businesses from customs declarations alone, on current (2016) UK-EU trade in goods could be around £13bn pa.”

On Whitehall’s preparedness, the document said: “In February, departments reported being on track for just under 85 per cent of no deal projects but, within that, on track for just over two-thirds of the most critical projects.”

According to a Government survey, 55% of British adults did not expect to be impacted by a no-deal Brexit.

They added: “Despite communications from the Government, there is little evidence that businesses are preparing in earnest for a no deal scenario, and evidence indicates that readiness of small and medium-sized enterprises in particular is low.”.

The study also warned that consumers would be hit by rising food prices and shortages due to a “very significant reduction” in the amount of goods able to pass through the Channel crossings which the government say could last for months.

Downing Street had been initially reluctant to release the report but was forced into publishing it after a Commons vote.

The warnings come just hours after Theresa May vowed to give MPs a vote on whether they would be willing to accept a no-deal Brexit or a delay to Article 50 if she is unable to secure their backing for her deal.

She added: “If we have to, we will ultimately make a success of a no-deal.”

Responding to the report, Labour MP Martin Whitfield of the Best for Britain campaign, said: “These are truly shocking admissions by a government looking to abdicate responsibility for the oncoming chaos.

“We’ve known for a while that businesses aren’t ready for Brexit and that it’s disrupting their work already – big or small. Now we know a third of the most critical government projects aren’t ready, while the economy is due to shrink. The government has full ownership of this mess.”

Source: Politics Home