IMF head warns on Brexit trade deal failure

Faisal Islam
Economics editor
@faisalislamon Twitter

Kristalina GeorgievaImage source, Getty Images

The IMF has suggested the UK and the EU should not "add to uncertainty" from coronavirus by refusing to extend the period to negotiate a post-Brexit trade deal.

Managing director Kristalina Georgieva, when asked what she thought about the prospect of no trade deal this year and no extension to talks, told the BBC that because of the "unprecedented uncertainty" arising from the pandemic, it would be "wise not to add more on top of it".

"I really hope that all policymakers everywhere would be thinking about [reducing uncertainty]. It is tough as it is, let's not make it any tougher," she said.

Asked specifically if she would advise an extension to trade talks, Ms Georgieva said: "My advice would be to seek ways in which this element of uncertainty is reduced in the interests of everybody, the UK, the EU, and the whole world."

The IMF chief had expressed her backing for the deal struck by Boris Johnson's team last autumn, having warned then that a no-deal Brexit would hit the UK economy by up to 5%.

The UK government chose to put into law a refusal to trigger provisions to extend the Brexit implementation phase beyond the end of the year.

That means that without a deal, the UK and EU would trade on World Trade Organization terms, including significant new taxes and checks on trade, from the beginning of next year.

Number 10 says that remains the position.

Yesterday, both the UK and EU announced a curtailed timetable to carry out three negotiation rounds by video conference.

Ms Georgieva says she is now preoccupied with trying to find ways to help alleviate "a global recession we have not seen in our lifetimes", arising out of the pandemic.

The IMF chief, a former vice-president of the European Commission, also heaped praise on the UK Treasury and Bank of England's "early" and well co-ordinated economic response to the crisis.

She said: "That very strong package of measures is helping the UK, but given the UK's sizeable role in the world economy, it's actually helping everyone."

The IMF is currently hosting a virtual version of its annual meetings with world finance ministers and bankers.