As the possibility of a no-deal Brexit looms, various leading figures representing financial institutions and manufacturers are highlighting the economic consequences of such an exit.
Ross McEwan, CEO of Royal Bank of Scotland, has warned that a ‘bad Brexit’ could usher in another recession
The UK government still owns more than 60% of RBS after bailing the bank out after the reckless behaviour of 2008. The Conservatives have detailed that they plan to re-privatise the bank, and if the economy takes a hit, the share price is likely to fall which would further reduce the tax payers return on investment (i.e., receive less money back than we bailed RBS out with). The taxpayer is set to make a £26bn loss from the bailout but a no deal might make our loss even more substantial.
Talking to the BBC RBS’s CEO stated: “We are assuming 1-1.5% growth for next year but if we get a bad Brexit then that could be zero or negative and that would affect our profitability and our share price.” and that the bank would become extremely hesitant in borrowing to some sectors, which would further hurt growth.
UK car sales have shrunk by 7% during 2018
Alex Buttle, director of car-buying comparison website Motorway.co.uk, said ‘We are now entering a crucial and unprecedented period for the car industry, as the next new number plate will be March 2019, when the UK is due to leave the EU. It’s likely to be a roller-coaster ride for new car sales figures for the foreseeable future, but it feels like we have just plunged into a deep canyon.’
Ana Nicholls, automotive analyst at the Economist Intelligence Unit, Predicts that if we avoid a chaotic Brexit the slump is likely to end next year:
‘The EIU’s core forecast is still that the UK will get an EU trade deal in 2021, after a transition period. If that happens, then the current drop in UK car sales should level out in 2019, with some modest growth in 2020-22 that should help to tide the industry over any disruption.
But the risks of a no-deal Brexit have risen in the past month, and that could make conditions in the auto industry much more difficult.’
UK furniture group DFS has reported a 50% tumble in profits for the last year today
The ‘exceptional downturn in market demand’ over the summer has been partially attributed to it being too hot to go furniture shopping… ok.
DFS has also warned that Brexit uncertainty is hurting consumers.
‘Overall we expect the market to remain subdued into 2019, constrained by political risk and weak consumer sentiment…
The group continues to face a particularly uncertain UK consumer market in the run-up to Brexit in March next year’
It seems like every day the media has a new set of union and business leaders warning about the dire consequences of Brexit. None seem to have filtered through to the government.