U.K. Prime Minister Boris Johnson.
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The U.K. economy had the worst performance among similar industrial nations in the third quarter. U.S. President-elect Joe Biden wants the U.K. to abide by last year’s agreement on Northern Ireland. Pressure also mounts on the U.K. to sign a trade deal with the European Union and avoid a “no-deal” Brexit.
- The U.K. economy grew 15.5% in the third quarter of the year, as it rebounded from the slump induced by the general lockdown imposed in the previous three months, the Office for National Statistics said on Thursday. But it was below what analysts expected, and the economy slowed down in September, with gross domestic product only increasing by 1%.
- This amounted to the worst performance among Western economies. U.K. GDP remained 9.7% below its pre-pandemic level in the third quarter — a gap twice as large as in Germany, France and Italy, and nearly three times as in the U.S.
- Irish Prime Minister Micheál Martin, who talked with Biden earlier this week, said on Thursday that the U.S. President-elect was “very committed to the Good Friday [1998 peace] Agreement” and “would favor obviously a deal between the European Union and Britain.”
- After a conversation with U.K. Prime Minister Boris Johnson on Tuesday, Biden noted that he had “reaffirmed his support” for the Good Friday agreement — a mention that was conspicuously omitted in Johnson’s own account of the event.
- Negotiators from the EU and the U.K. are meeting to try to strike a compromise after 10 months of negotiations, before a summit of EU leaders next week that looks like the ultimate deadline for an agreement to come into force when the U.K. leaves the European single market on Jan. 1.
The outlook: Just as the recovery was weaker in the U.K. than in the rest of Europe, the slump expected in the fourth quarter of the year is likely to be worse. And warnings from officials, businesses or even the Bank of England that the country hasn’t properly prepared for Brexit — let alone for the dreaded “no-deal” scenario — are multiplying.
With the unemployment rate expected to peak at almost 8% in the first half of 2021, and public finances stretched to the limit by the repeated fiscal plans designed to help workers and businesses weather the recession, leaving the European single market without a trade deal would inflict a devastating blow on the U.K. economy. Its long-term consequences, as shown recently by a London School of Economics study, would be even worse than the COVID-19 pandemic’s impact.
Read: Britain is unprepared for real Brexit: official reports
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