A possible no-deal Brexit could push the UK into recession in 2020, according to the latest Interim Economic Outlook report from OECD. The intergovernmental economic organisation said that the possibility of UK losing access to EU markets after 31 October, the new deadline set for Brexit, could have a negative impact, not only on the UK’s pound but also on its trade, investment and technical knowledge.

Such a scenario it predicted would put the UK on a slower economic growth path over the next few years and also shave off nearly three percent off its annual GDP in 2022. On an annual basis, this would mean a contraction of one percent in 2020 and a further 0.5 percent hit to growth in 2021 and 2022.While such a scenario would also have a negative impact on the EU’s GDP in 2022 as well, it would be much lower at 0.6 percent.

However, on the positive side of things, OECD said that if the UK manages to secure an agreement with the EU before the 31 October deadline, the decline in its economic growth would be limited to 0.9 percent in 2020 from one percent this year. While this still translates to a downgrade revision of 0.2 percentage points from its May forecast, it is much better than the scenario of a recession.

Apart from the UK, the OECD has made downward revisions for almost all countries with regards to their economic growth projections, as compared to its previous report in May 2019. This downgrade it said is primarily because of the escalating US-China trade war. This factor alone, it said was “taking an increasing toll on confidence and investment, adding to policy uncertainty, aggravating risks in financial markets and endangering already weak growth prospects worldwide.”

Overall, it projected the global economy to grow by 2.9 percent in 2019 and three percent in 2020 – marking the weakest annual growth rates since the financial crisis.