IMF’s Lagarde says a no deal Brexit is the most significant risk to the UK economy

IMF chief Christine Lagarde stating the obvious

• IMF projections assume a timely deal, smooth Brexit
• But a more disruptive departure will have a much worse outcome
• Should not understate progress made in Brexit talks
• But there are many critical issues still left unresolved
• Range of issues at hand and lack of time for a Brexit deal is daunting
• Sterling’s depreciation since Brexit vote has hurt real income growth
• UK exports have not picked up enough to stop overall slower growth
• UK has structural challenges beyond Brexit
• Disorderly Brexit would lead to sterling depreciation and increased deficit
• No deal Brexit outcome would lead to reduction in size of UK economy
• Any Brexit deal will not be as good as the current smooth processes in place
• UK would need to negotiate 63 trade deals in case of a no deal Brexit

ForexLive

Lagarde mainly highlighting the risks that she and the IMF are viewing on the UK economy on the Brexit scenarios they think will take place. There’s a lot of emphasis on a no deal outcome, much like all other Brexit forecasts, but that’s very much a “prepare for the worst” kind of mentality more than reflecting the current odds (which I still see somewhere near to 50-50).