Investors think Boris Johnson is bluffing about a no deal Brexit
The Port of Dover is extremely busy.At the moment 9,500 lorries are passing through every day - an unusually high number for this time of year.Earlier on Thursday, freight traffic was queuing back onto the M20 for several miles.The port isn’t certain why it’s suddenly dealing with such high volumes.
Its best guess is that companies are trying to rush goods across the Channel, in both directions, just in case trade talks end in failure.A no deal Brexit will almost certainly cause border disruption.
The EU is our nearest and largest trading partner.The government hasn’t published an up-to-date assessment of the economic damage no deal would cause.
Happily, two weeks ago, the government’s official forecaster did.The Office for Budget Responsibility (OBR) calculates that the number of people who are unemployed in the UK would rise by 280,000 in event of no deal - that’s in addition to those jobs being lost to Covid-19.The OBR estimates that inflation would rise almost immediately - the weaker pound and tariff and non-tariff barriers leaving consumer prices 1.5% higher.And the OBR thinks no deal would permanently knock around 2% off our economic output in the years to come.We are currently going through a severe recession due to coronavirus, no deal would undoubtedly slow the recovery down.
The government’s own forecaster thinks it will make us materially poorer.The prime minister followed the scientific modelling on Covid. Will he follow the economic modelling on Brexit?
Boris Johnson says no deal is a “strong possibility” but the pound is holding steady.Investors think Boris is bluffing, they may be wrong.