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No Brexit trade deal could cost reeling UK economy $25 billion next year

October 16, 2020. Summarized by summa-bot.

UK Prime Minister Boris Johnson has an expensive choice ahead.

Now, after a meeting of EU leaders decided that not enough progress has been made in talks on a new trade deal with the United Kingdom, Johnson faces a difficult choice: Does he keep discussions going past a self-imposed deadline, or walk away?

Walking away empty handed would create disruptions to trade when the transition period ends later this year, shaving more than $25 billion off the UK economy in 2021 compared to a scenario where a limited free trade deal is agreed, according to a CNN Business analysis based on forecasts from Citi and the Institute for Fiscal Studies.

"Actions taken to address the pandemic and decisions made on future trading relationships will have a lasting impact on the United Kingdom's economic trajectory for years to come. "

The clock is ticking for the United Kingdom and the European Union to come to terms, with Britain set to lose its favorable trading status with the bloc at the end of December.

According to economists at Citi and IFS, even the best-case scenario of a limited trade agreement would leave the UK economy 2. 1% smaller in 2021 than it would have been if the transition period was extended indefinitely.

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