Brexit in 2020 Risks Overtaxing Economy, Ex-BOE Official Warns

Leaving the European Union this year would be a lot to handle for the U.K. when the economy is already reeling from the coronavirus outbreak, according to a former Bank of England rate setter.

Adam Posen

Photographer: Marlene Awaad/Bloomberg

While Prime Minister Boris Johnson has pledged to end the Brexit transition this year, the two sides remain far apart in talks for their future relationship. That means the U.K. faces the prospect of leaving the EUs single market and customs union without a trade deal in place.

If Britain defaults to trading with the bloc on terms set by the World Trade Organization, that would mean steep tariffs on goods like cars. Yet even an agreement would be of limited benefit, said Posen, who served as a BOE policy maker between 2009 and 2012.

“Anybody who thinks the Brexit deal is going to do some good is probably fooling themselves,” he said. The split “on top of the retail sector, the tourism sector having to make big changes, agriculture in Britain having to make big changes because of migration issues from both the pandemic and Brexit -- you end up putting the economy through a lot very quickly.”