Editor’s Note: James Ball is an award-winning journalist and author who has worked for WikiLeaks, The Guardian, The Washington Post and BuzzFeed. The opinions in this article belong to the author.
As the Greek debt crisis reached its peak in 2012, it was almost impossible to turn on the news without hearing the word “contagion” – the idea that the economic woes caused by Greece’s huge government debt (or, to some, by the greed of its creditors) would cause a systemic financial crisis across the globe.
In 2019, a far larger country stands on the brink of potential meltdown, and the global response is … muted. If the United Kingdom does not find some way to either support a deal to exit the European Union or else to negotiate with its 27 EU partners an extension on the Article 50 process, the UK is set to leave the EU on March 29 with no deal.
It is difficult to describe the scale of economic disaster this outcome would be for the UK. Most coverage has, reasonably, focused on the initial chaos – a country which relies heavily on cross-channel shipping for food, medicines, manufacturing supplies and more could see crossing fall by a reported 75% to 87% for six months, with almost no viable alternative routes to match anything like the lost capacity.
But the longer-term economic harm would be devastating. The midpoint estimates of such a crisis suggest a drop of close to 9% in GDP – a far, far deeper recession than the financial crisis of 2009 – and huge increases in unemployment, the cost of borrowing, plummeting value of the pound, and more. This damage could easily take a decade or more to repair.
That combination of chaos and of deep economic crisis would spell trouble in any economy – as the well-founded concerns about the broader effects of a Greek collapse showed – but the UK is not just any economy.
Depending how you look at it, the UK is either the fifth- or sixth-biggest economy in the world – with a GDP around 13 times that of Greece. It is also, unlike Greece, perhaps the largest financial center in the world: many of the world’s key exchanges rely on London to function.