The International Monetary Fund (IMF) on Monday warned that a "no-deal" Brexit on World Trade Organization terms will entail "substantial costs" for the UK economy.
IMF Managing Director Christine Lagarde gave a speech at the Treasury in London, less than 200 days till the UK, yet to secure a post-Brexit deal with Brussels, is due to depart the bloc.
The IMF said that all likely Brexit scenarios would "entail costs", but a disorderly departure could lead to "a significantly worse outcome", the BBC reported.
"All the likely Brexit scenarios will have costs for the UK economy and to a lesser extent, as well, for the EU," Lagarde said.
"The larger the impediments to trade in the new relationship, the costlier it will be. This should be fairly obvious, but it seems that sometimes it is not."
Lagarde said the UK's economy was projected to grow 1.5 per cent over the next two years only if a substantial deal was struck with the EU and the withdrawal process was orderly.
The UK's conservative government, under the leadership of Prime Minister Theresa May, has so far failed to strike a deal with negotiators in Brussels despite two years of discussions.
The Cabinet's draft deal, the so-called Chequers plan, even faced opposition from hardline Brexit supporting backbench party members, increasing the chances of a no deal scenario.
But Lagarde offered a grave warning that failure to secure a deal would have grave consequences for the UK.
"It would inevitably have a series of consequences in terms of reduced growth going forward, increased deficit most likely, depreciation of the currency and it would in reasonably short order mean a reduction of the size of the UK economy," she said.
She added that any deal struck after Brexit would not be as good as the status quo. The UK electorate narrowly voted to abandon the EU in a referendum in June 2016.
The country is on track to formally leave the bloc by March 2019.
--IANS
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