Research: Brexit’s inflation dilemma

Brexit’s inflation dilemma

By Erik Norland, Senior Economist, CME Group

No-deal Brexit could stoke UK inflation

  • As Brexit politics grabs headlines, UK inflation is caught in the crossfire
  • No-deal Brexit could sink pound by 10%, elevate inflation rate by 1%
  • Nearly 25% of UK consumer goods are imported, could see price hikes
  • Bank of England could be caught between raising and cutting interest rates
Watch video

The (dis)inflationary implications of Brexit

  • Pound could slump 10% on no-deal Brexit, and rally 16% with a compromise
  • UK inflation rate could rise by 1% if pound drops by 10%, and vice versa
  • Change in inflation rate could kick in four months after the pound’s move
  • A 16% pound rally could slash UK inflation to nearly zero within four months
Read article