'Britain will suffer a two-year recession and lose 3.5 per cent of its GDP in the event of a No Deal Brexit, the International Monetary Fund has warned.
The bleak forecasts come as as Theresa May prepares to meet EU leaders to push for a longer delay to the UK's departure tomorrow.
The IMF said that even in a relatively orderly no-deal Brexit scenario - with no delays at borders and minimal financial market turmoil - the economy would grow 3.5 percent less by the end of 2021 than it would under a smoother Brexit.
'The increase in trade barriers has an immediate negative impact on UK foreign and domestic demand,' the IMF said.
The EU economy would suffer too but by much less than Britain, facing an estimated 0.5 percent hit to gross domestic product compared with a smooth Brexit scenario, the IMF said.
British exports to the EU and other countries which have trade deals with the bloc would face new tariffs and regulatory barriers if Britain reverted to the World Trade Organization rules favoured by some Brexit supporters.
Supporters of an abrupt Brexit have accused the IMF of making politically motivated forecasts in the past.
In its report on Tuesday, the fund said a worse-case no-deal Brexit scenario involving border delays and financial market turmoil would increase the damage to about 4 percent of GDP by 2021.
The forecasts took into account the British government's plans not to impose tariffs on most categories of imports in the event of a no-deal Brexit, and also assumed that the Bank of England would cut interest rates.'
Read more: Britain will have a two-year recession after a No Deal Brexit and lose 3.5 per cent of its GDP, warns IMF
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