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04-Jun-2020 13:29 by 9 Comments

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'We feared that if Britain decided to leave, it would most likely entail a depreciation of sterling, higher inflation leading to a squeeze on disposable income and a reduction in investment,' she said.'People said 'Oh those experts', but we are seeing the narrative we identified as a potential risk being rolled out as we speak.' Mr Hammond said the report underlined the need to avoid a 'cliff edge' Brexit.'One of the biggest boosts we can provide to the economy - the economy of the UK and the economy of the EU27- is making early progress on delivering certainty and clarity about our future relationship with a time-limited implementation period agreed at the earliest opportunity,' he said.

The report said: 'Despite a strong recovery in global growth and supportive macroeconomic policies, the impact of the decision to exit the European Union has weighed on private domestic demand.'The employment rate has remained around record highs, but the sharp depreciation of sterling following the referendum pushed up consumer price inflation, squeezing household real income and consumption.'Business investment growth has been lower than would be expected in the context of strong global growth and high levels of capacity utilisation, owing to heightened uncertainty about economic prospects.'IMF chief Christine Lagarde told a press conference this morning that its gloomy predictions were being borne out.Commission president Jean-Claude Juncker - whose job Mr Barnier is said to covet - and his powerful chief of staff Martin Selmayr are said to be among those irritated by his behaviour.'Nobody pays any attention to what Barnier says in Brussels,' a source told The Sun. Juncker has fallen out with him because of his colossal ego, and even Selmayr is having second thoughts.' In contrast with Mr Barnier, Belgian PM Charles Michel recently urged a 'CETA plus plus' deal with the UK, and Italian PM Paolo Gentiloni called for a 'tailor-made' agreement.He has said that the UK will have to accept all EU regulations during the two-year period, and abide by rulings of the European Court of Justice - drawing complaints from Tory Eurosceptics that Britain is being made a 'vassal state'.But despite the public insistence that Britain will be subject to the 'complete architecture' of the EU, there are reports that European leaders are privately preparing a climbdown.Asked whether Britain will have to obey rules on fishing quotas, Mr Barnier said 'community policies will continue to apply'.

But he admitted there was an issue because after 2019 the UK will not be part of 'discussions establishing the fish quotas'.

In the trade talks Ministers are expected to deploy one of Brussels' favourite phrases, by warning that the EU cannot hope to 'cherry pick' parts of the UK economy to trade with.

Mr Barnier is due to publish guidelines on the transition talks, which the EU is insisting must be settled before the trade phase can get under way for real.

'Any changes made to the acquis during this time should automatically apply to the United Kingdom.'All existing union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures will apply, including the competence of the court of justice of the European Union.'From March 30, 2019 Britain will become a 'third country' and will 'no longer be represented in union institutions, agencies, bodies and offices'.'The transition period needs to be clearly defined and precisely limited in time.

The commission recommends that it should not last beyond 31 December 2020,' the guidelines state.

The important thing is that people don't need to feel discriminated on the UK side,' the official said.

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