LONDON (Reuters) – A no-deal Brexit outcome could wipe at least three percentage points off UK gross domestic product in 2021 and lead the Bank of England to increase its asset purchases and even to cut interest rates below zero, JPMorgan economists said on Monday.
The predictions come as British Prime Minister Boris Johnson tries to persuade lawmakers in his party to vote on Monday for a bill that would break international law by breaching parts of the Brexit divorce deal and that Brussels says will wreck trade talks.
In a research note, JPMorgan economists said they still see a one-third chance of a so-called hard Brexit but acknowledge that brinkmanship into October will likely raise risk perceptions.
“A no-deal outcome could take at least three percentage points off UK GDP in 2021 and result in further BoE QE, with an outside chance of the Bank cutting policy rates below zero,” the note said.
The BoE’s key policy rate stands at 0.1%.
(Reporting by Dhara Ranasinghe; Editing by Tommy Wilkes)
