Powered by MOMENTUM MEDIA
subscribe to our newsletter

UK headed for 'shallow recession': NAB

The UK is likely to enter a brief 'technical recession' as the country adjusts to the realities of Brexit, says NAB – but there will be "relatively little" impact on global growth.

In its latest global growth forecasts, NAB Group Economics has revised down its UK year-average GDP growth forecasts in the wake of the UK vote to leave the European Union.

The short-term result of Brexit is likely to be a "shallow" or technical recession (ie, two quarters of negative GDP growth), said NAB.

"By itself, a UK slowdown has relatively little impact on global growth," said the report. "The main risk to global growth comes from the extent to which financial market disruptions and uncertainty also impact other countries, in particular the rest of Europe."

In a scenario modelled by NAB, a "spillover" to Europe would lead to a peak decline in world GDP of 0.5 per cent relative to the baseline scenario.

Advertisement
Advertisement

"The impact on Australia is small; the ‘spillover’ scenario generates a depreciation of the Australian dollar which limits the impact on real GDP growth," said NAB.

"That there would be some impact on the EU outside of direct trade impacts would be expected.

"While it was the UK’s decision to leave, the rest of the EU now (involuntarily) faces the prospect of being in a smaller trading bloc, with some of the same negative consequences," said the report.

[Related: Major bank's 'torturous and expensive journey']

UK headed for 'shallow recession': NAB

PROMOTED CONTENT


>In its latest global growth forecasts, NAB Group Economics has revised down its UK year-average GDP growth forecasts in the wake of the UK vote to leave the European Union.

The short-term result of Brexit is likely to be a "shallow" or technical recession (ie, two quarters of negative GDP growth), said NAB.

"By itself, a UK slowdown has relatively little impact on global growth," said the report. "The main risk to global growth comes from the extent to which financial market disruptions and uncertainty also impact other countries, in particular the rest of Europe."

In a scenario modelled by NAB, a "spillover" to Europe would lead to a peak decline in world GDP of 0.5 per cent relative to the baseline scenario.

"The impact on Australia is small; the ‘spillover’ scenario generates a depreciation of the Australian dollar which limits the impact on real GDP growth," said NAB.

"That there would be some impact on the EU outside of direct trade impacts would be expected.

"While it was the UK’s decision to leave, the rest of the EU now (involuntarily) faces the prospect of being in a smaller trading bloc, with some of the same negative consequences," said the report.

[Related: Major bank's 'torturous and expensive journey']

UK headed for 'shallow recession': NAB
mortgagebusiness

Latest News

The chief of Australia’s largest bank has said lenders should act pre-emptively and shift their floor rates for mortgage serviceability am...

Total household wealth reached a high of $13.4 trillion in the June quarter, primarily due to rising property prices, according to the Aust...

The property exchange settlement platform has been granted approval to establish an Electronic Lodgement Network in the ACT.  ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.