International Monetary Fund (IMF) boss Christine Lagarde believes Britain must prepare itself for a painful divorce from the European Union once Brexit talks formally begin later in the year.
Speaking at the World Economic Forum in Davos, Switzerland, Lagarde said that Brits must prepare for “pain” as the extremely complicated process of leaving the 28-nation bloc begins, adding that no deal with the EU will “as good” as remaining a member.
“When you belong to a club, whatever that is, the members of the club have a degree of affinity and particular terms under which they operate,” Lagarde told the BBC’s Kamal Ahmed during her appearance. “Someone outside the club has different access.”
Lagarde said that despite the better than expected performance of the British economy since the vote, the UK is certainly not out of the woods yet. “We are still of the view that it will not be positive all along and without pain,” she said.
The full economic impact of leaving the EU will only be clear once the terms of leaving are decided, Lagarde added, saying: “The terms under which the [agreement] will be facilitated, over what period of time – question mark. Over what kind of transition period – question mark. It is only when those questions are better clarified that we will understand how the UK economy is going to pan out.”
Earlier this week, the IMF revised up its growth forecast for the UK this year but pencilled in a hefty downgrade for 2018 as the Fund expects the economic pain of Brexit to be delayed rather than avoided.
In its latest World Economic Outlook, the IMF projects 2017 growth for Britain of 1.5%, up from its 1.1% forecast from October, but its projection for in 2018 is slashed to 1.4%, down from 1.7% previously.
The fund has consistently argued that Brexit will be a material negative for the UK, and in May last year, just over a month before the referendum, Lagarde said at a press conference that there would be”no positives” from Brexit and that the consequences could be “pretty bad to very, very bad.”