Law firm report says economy will be hit hard

Research by international law company Baker and McKenzie has revealed the combination of the COVID-19 pandemic and the United Kingdom's potential departure from the European Union without a trade deal could cost the UK as much as 134 billion pounds ($174 billion) in lost GDP each year for the next decade.

Britain formally left the EU at the end of January, entering a transition period which lasts until the end of 2020, during which time the two sides were supposed to reach an alternative trade arrangement. Weeks later, the pandemic erupted, transforming the global political landscape and putting national economies and infrastructure under unprecedented strain.

It also meant negotiations were sidetracked for some time, and now British Prime Minister Boris Johnson's self-imposed deadline of Oct 15 for a deal is looming, with no obvious sign of significant progress.

Last week, following talks with European Commission President Ursula von der Leyen, that deadline was put back by a month but the outlook remains unclear.

According to the Baker and McKenzie report, the impact of the outbreak will be to cut GDP by a further 2.2 percent, in addition to what had already been forecast.

Even with a trade deal, Britain's severance from the EU would see exports down by 6.3 percent, and a 3.1 percent drop in GDP as compared to having remained, but should there be a no-deal Brexit, that figure will be 3.9 percent.

"Despite businesses taking steps to offset the added costs of Brexit by reconfiguring supply chains, the decline in export revenues for UK manufacturers will be substantial," the report said.

"With the costs of the UK's departure from the EU likely to be very high, the government will need to use all the tools at its disposal to help mitigate the economic damage."

The UK's National Health Service has already warned of a "triple whammy" hitting the service this winter, with a backlog of treatment caused by the first wave of the pandemic, the prospect of a second one and limitations placed on resources by the requirements of social distancing when treating patients.

In addition, a no-deal Brexit could lead to significant disruption of medical supply chains, because of the additional administrative work importers will face. The Association of the British Pharmaceutical Industry and European Federation of Pharmaceutical Industries and Associations issued a joint statement on the topic last week.

Speaking about the pandemic at the weekend, Johnson told a BBC interviewer: "I tell you in all candour, it will continue to be bumpy through to Christmas and may even be bumpy beyond."

Previously, before he became prime minister, in summer 2017 Johnson told members of Parliament "there is no plan for no deal because we are going to get a great deal," and in July this year he spoke of his hopes that it might "be possible to move away from the social distancing measures" by November, and that there could be a "more significant return to normality" by Christmas.