IMF warns of no-deal Brexit risks with time running out for UK

 British Prime Minister Theresa May departs after

British Prime Minister Theresa May departs after speaking at a press conference after attending a special session of the European Council over Brexit on November 25, 2018 in Brussels, Belgium. (Photo by Sean Gallup/Getty Images)

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The International Monetary Fund renewed its warning about the risks to the UK’s economic outlook if Britain leaves the European Union without a deal.

The Washington-based lender held its 2019 growth forecast at 1.5%, saying the fiscal stimulus announced in the October 29 budget would likely help offset the dampening effect which Brexit fears are having on the world’s fifth-biggest economy. However, “substantial uncertainty” surrounds the estimate.

“This baseline projection assumes that a Brexit deal is reached in 2019 and that the UK transitions gradually to the new regime,” the IMF said in its World Economic Outlook Update on Monday. “However, as of mid-January, the shape that Brexit will take remains highly uncertain.”

The forecasts were published on the eve of the World Economic Forum’s annual meeting in Davos, Switzerland. UK Prime Minister Theresa May isn’t attending this year as she deals with the unfolding political drama at home.

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With less than 10 weeks before the UK is due to leave the EU, time is running out for May to get a withdrawal deal through Parliament after lawmakers emphatically rejected her blueprint last week. May will present her Plan B later on Monday.

A chaotic departure would threaten the global outlook, according to the IMF. Global growth is set to slow to 3.5% in 2019, though it could be weaker if a no-deal Brexit or a larger-than-anticipated slowdown in China materialise, it said.

The IMF sees the UK economy expanding 1.6% in 2020, little changed from the 1.5% it forecast in October.

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