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No-deal Brexit would put 60,000 jobs at risk in China

No-deal Brexit would put 60,000 jobs at risk in China

Around 60,000 workers in China could lose their jobs if the United Kingdom leaves the European Union without a deal in March, according to a new study published on Monday by researchers at the IWH Institute in Germany.

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12.02.2019 10:06 PM

Around 60,000 workers in China could lose their jobs if the United Kingdom leaves the European Union without a deal in March, according to a new study published on Monday by researchers at the IWH Institute in Germany.

The latest research on the impact of a no-deal Brexit found that 600,000 jobs across the globe would be at risk. The study focused on trade in goods and services, and examined a hypothetical scenario where UK imports from other countries fell 25% after it left the EU.

The exact framework for Britain's departure has yet to be decided, even though the legally binding exit date of March 29 is just over six weeks away. Prime Minister Theresa May did put forward a proposed deal to parliament in January after painstaking negotiations in Brussels, but it was voted down and the uncertainty continues.

The probability of the UK crashing out of the EU without a deal remains high and the study's co-author Oliver Holtemoeller said in a statement accompanying the research that a "hard" departure could cause havoc for supply chains as new tariffs would be imposed at the border.

Economists at the IWH institute in Halle, Germany looked solely at trade and did not consider how an acrimonious divorce could impact the economy in other ways, such as potential changes to investment flows. The study noted that the damage will not be limited to the EU either as "markets are linked up across the globe."

China is set to bear the brunt of the damage in Asia where 60,000 workers could see some form of job upheaval, though the economists said those affected may not necessarily be laid off. The study noted: "Given the lack of skilled labour in many advanced economies, firms could also try to keep staff on by cutting hours or opening new markets."

A no-deal Brexit would also impact 3,000 people in Japan. Meanwhile, Germany, which is Europe's largest economy, will be most affected as more than 100,000 jobs would be under threat and a further 50,000 could be impacted in France. Within the 27 member EU countries, enterprises that directly export to the UK would be particularly exposed to a no-deal exit.

The uncertainty of Brexit appears to be undermining Britain’s economy already after new data released by the government on Monday showed it expanded at the slowest rate since 2012 last year. The dearth of any official agreements has put businesses on edge in the run-up to the withdrawal date and the figures show Britain's traditionally dominant services sector slumped in January.

"The economy is clearly struggling in the first quarter of 2019 amid serious business and consumer caution resulting from heightened Brexit uncertainties while weaker global growth is also impacting," EY ITEM Club chief economic advisor, Howard Archer said in a note. 

The Office for National Statistics also said on Monday that gross domestic product growth had cooled from 1.8% in 2017 to 1.4% last year and that growth only managed to hit 0.2% during the final quarter of last year. It added that construction, production and services saw the first broad-based fall on a monthly basis in more than six years.

However, Markets.com market analyst, Neil Wilson believes the slowdown was not solely the fault of Brexit. He said: "Sterling was knocked off course again as a weak GDP print confirmed the slowdown in the economy. We must caution against blaming all on Brexit - global cooling is having the biggest dampening effect on all major economies at present - although we must note that (UK) business investment is collapsing."

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