LONDON (Reuters) - Economic growth in Britain has stalled and chances are one-in-four that the Brexit crisis has already tipped the country into a recession, a leading think tank said on Monday.
The National Institute of Economic and Social Research (NIESR) said risks to growth were "heavily weighted to the downside” given that the chances Britain would leave the European Union without a deal were now roughly 40%.
Boris Johnson, the front-runner to become prime minister this week, has said he will ramp up preparations for a no-deal exit to try to force the EU to make changes to the agreement Prime Minister Theresa May made with the bloc but which British lawmakers have voted down three times.
NIESR has previously estimated that Britain’s economy contracted in the April-June quarter.
If Britain’s economy shrinks in the third quarter as well, that would be classified as Britain’s first recession since the global financial crisis.
Last week, Britain’s budget forecasting office also said the country might be entering a full-blown recession. In a report published on Monday, it said prospects for the coming quarters were fraught with danger.
NIESR cut its forecasts for Britain’s economic growth in 2019 and 2020 to 1.2% and 1.1%, down from 1.4% and 1.6% previously.
It assigned a 30% chance that the world’s fifth-biggest economy would contract in 2020, based on an average of all Brexit scenarios.
Even if Britain’s next prime minister strikes a Brexit deal, there will likely be a hit to the public finances, NIESR said.
***** FILE PHOTO: Construction cranes are seen above a refurbished Mill building in the city centre of Manchester, Britain, February 23, 2019.