A note from economic research consultancy Pantheon on UK / EU / Brexit / trade discussions.
In brief:
- the end of this year ... the Brexit transition period is due to end. If the U.K. and E.U. have not agreed a new trade deal by December 31, then both parties automatically will trade with each other on WTO terms in 2021. The U.K. also would cease to benefit from the 40 existing trade agreements in place between the E.U. and other countries.
- probably would push the U.K. economy into a shallow recession in 2021
- WTO terms ... We see a 20% chance of this worst-case scenario, given current differences in the U.K and E.U. positions.
- Our base case remains that the PM compromises to get a Canada-style FTA
