The speakers are stuck on fishing rights, state aid to companies and how to settle disputes. Johnson will have to decide whether to stick to his weapons of national sovereignty in all three areas is the economic price the United Kingdom will pay in the event that negotiations fail.
Tariffs, export quotas, bureaucracy and other trade barriers that will enters into force on January 1 if there is no agreement that will extend the UK recovery from the coronavirus recession by almost a year, the watchdog said. Unemployment would be another percentage point higher, it added.
And even with a Brexit deal, the watchdog said the economy is likely to experience permanent “scarring” that will reduce production by 3% under its central scenario, where coronavirus restrictions are kept in place until spring.
On Wednesday, Finance Minister Rishi Sunak unveiled a spending plan of £ 4.3 billion ($ 5.7 billion) to help prevent unemployment through measures such as subsidized work for young people and increased capacity at job support centers.
The Office of Budgetary Responsibility expects unemployment to rise to 7.5% in the second quarter of next year, meaning 2.6 million people will be out of work – 1 million more than the current level. If no Brexit agreement has been agreed, unemployment will reach 8.3% in the third quarter of 2021 and the recovery from the pandemic will take until the third quarter of 2023 instead of the end of 2022.
“Our state of health is not over yet and our financial emergency has just begun,” Sunak told parliament in a speech. The British government is spending £ 280 billion ($ 373 billion) on aid measures to get the country through coronavirus, he added.
“It takes much longer for what I call the real side of the economy to adapt to the change in transparency and to the change in profile in trade,” he said in testimony Monday before Parliament’s Finance Committee.
Even if the UK and the EU reach an agreement, UK companies will still face additional costs of doing business, such as those relating to border controls and customs rules at a time when many are suffering from the impact of the pandemic on trade.
– Charles Riley contributed reportg.