No-deal Brexit could tip UK into recession, warns RBS chief

Posted On: 
4th October 2018

Leaving the European Union without a deal could tip the British economy into a recession, the boss of the Royal Bank of Scotland has warned.

The banking chief warned that firms were already holding back from investing in the UK because of Brexit uncertainty.
Credit: 
PA

RBS chief executive Ross McEwan said his bank - which is still part-owned by UK taxpayers following the 2008 financial crisis - had modelled "zero or negative growth" rates for next year if the UK experiences a "very, very harsh" exit from the EU.

The bank is currently predicting that the British economy will grow by around 1.5% next year.

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"But if we get a very hard Brexit scenario, we have other factors that we put across that say it actually will be less than that," he told the BBC.

"And the economy may well go down to zero or negative growth next year if that Brexit relationship is very, very harsh."

Mr McEwan said a no-deal outcome could also see RBS itself - which employs more than 70,000 people -  register "zero or negative" growth.

And he warned that big firms were already holding back from investing in the UK because of uncertainty over the status of talks with the EU.

"First off we're seeing the very large corporates just pausing in their investment in to the UK," he said.

"Because they're sitting saying 'do we wait for another six months to see what the outcome is?'...

"And they can say, 'well in six months' time we can either come back and invest or if things are really bad we will stay away from investing here'.

"That's the reality of what's happening today."

The warning is likely to be seized on by anti-Brexit campaigners, who have already pounced on a claim by Bank of England governor Mark Carney that leaving the EU without a deal could lead to a crisis as severe as the 2008 crash.

Meanwhile, the Treasury's own economic forecasts say a no-deal Brexit would cause a 7.7% hit to Britain's GDP and blow a £80bn black hole in the public finances - a claim dismissed by Brexiteers as part of "Project Fear".