A hard Brexit scenario would plunge the UK into recession by 2022, the Canadian credit rating agency DBRS warned on Thursday.
The UK will formally leave the EU in March 2019 but the trading status quo could be maintained for a transition period lasting until December 31, 2020. Thereafter, according to DBRS, the UK will face a hard transition, with trade starting to shrink in 2021 before the economy enters into recession in 2022.
The main losses for the economy would come from the loss of passporting rights for major lenders and manufacturing.
In a presentation in the City reported by CNBC, the head of the Sovereign Ratings at DBRS, Nichola James, told the press that this development would see the U.K.s debt-to GDP ratio rise to 92%, reaching 2015 levels. That is in sharp contrast to the 84% projected by the International Monetary Fund.
In addition, the pound would see a further 15% devaluation and unemployment would also see an uptick.
Nonetheless, the UK’s triple-A sovereign rating is not under review at this point in time and the country’s payment schedules mean the country can weather even a worst-case scenario storm.