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Illustration: Sarah Grillo/Axios

In most countries, the government claims to be doing what's in the economic best interest of its citizens. In general, this helps the cause of capitalism. Now, the oldest democracy in the world is taking the opposite route.

What's happening: This week saw the release of three separate worrisome official reports on the economic consequences of Brexit.

  • The U.K. Treasury, modeling a deal very similar to the one currently on the table, says it would result in the British economy being 3.9% smaller in 15 years than it would be if it stayed in the EU. If there's no deal at all, the gap rises to 9.3%.
  • The Bank of England's forecast is worse: A failure to reach a deal could cause the worst recession since the Second World War, with the GDP falling by as much as 8% in one year and house prices crashing by 30%. If Britain manages to agree to a deal, the result is still bad, with the GDP ending up between 1% and 3.75% smaller than it would have been as part of the EU.
  • The Scottish government expects that Scotland will lose £1,610 ($2,055) per person by 203o as a result of leaving the EU, and that investment in Scotland would fall by 7.7%.

It's hard to model Brexit with accuracy, but there's surprising unanimity — even among Brexiteers — that its economic effects will be negative, and substantially so.

The Italian story is even scarier: The populist government seems to be steering the country toward a crisis that could be truly catastrophic, not only for Italy but also for Europe and the entire global economy. The crises of 2008 and 2011 ultimately ended with politically unpopular bailouts, but Italy, with its €2.3 trillion ($2.6 trillion) national debt, is too big to bail out.

Why it matters: China isn't big enough — yet — to drive the global economy on its own. Without G7 economies like the U.K. and Italy contributing to their full potential, the entire world could splutter into recession.

Go deeper:

Go deeper

In photos: D.C. and U.S. states on alert for pre-inauguration violence

National Guard troops stand behind security fencing with the dome of the U.S. Capitol Building behind them, on Jan. 16. Photo: Kent Nishimura / Los Angeles Times via Getty Images

Security has been stepped up in Washington, D.C., and state capitols across the U.S. as authorities brace for potential violence this weekend.

Driving the news: Following the Jan. 6 insurrection at the U.S. Capitol by some supporters of President Trump, the FBI has said there could be armed protests in D.C. and in all 50 state capitols in the run-up to President-elect Joe Biden's inauguration Wednesday.

12 hours ago - Politics & Policy

The new Washington

Illustration: Sarah Grillo/Axios

The Axios subject-matter experts brief you on the incoming administration's plans and team.

Rep. Lou Correa tests positive for COVID-19

Lou Correa. Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images

Rep. Lou Correa (D-Calif.) announced on Saturday that he has tested positive for the coronavirus.

Why it matters: Correa is the latest Democratic lawmaker to share his positive test results after last week's deadly Capitol riot. Correa did not shelter in the designated safe zone with his congressional colleagues during the siege, per a spokesperson, instead staying outside to help Capitol Police.