Advertisement

  1. ITV Report

UK economy would be better off if crippling Brexit is reversed, OECD economic study claims

OECD general secretary Jose Angel Gurria presented the 2017 survey's findings in London.

Britain's economy is on track to be crippled by Brexit and the country would be a lot better off if the process is reversed, according to a key economic survey.

A second referendum overturning a Brexit vote that was partly swung by "less-educated workers" would have a "significant" and "positive" impact, the Paris-based Organisation for Economic Co-operation and Development (OECD) said.

The 2017 survey on the UK economy projects growth of just 1% in 2018 and says the ongoing uncertainty in Brexit talks means a free-trade agreement with the EU is unlikely to be agreed by the 2019 exit date.

Its other stand-out analysis of Brexit included:

  • A warning that a "disorderly Brexit" that sees negotiations between the EU and UK cut short would send the exchange rate to new lows and see the UK's sovereign rating downgraded.
  • Business investment would seize up if a Brexit deal falters and "heightened price pressures" would "choke off" private consumption.
  • Gloomy Brexit forecasts could "prove more favourable" but would require an "ambitious EU-UK agreement" and "transition period" to allow for adjustment.
  • Brexit has compounded the challenge of reviving growth in Britain's labour productivity, which remains weakest outside of Greater London and the South East of England.
  • "Well-being inequalities" may have swung the Brexit vote with "less-educated workers in remote regions (who) might have perceived to benefit less from the European project".

Chancellor Philip Hammond said the survey represented the "independent" OECD's view and not the government's.

But he hailed it as "an important source of challenge on all aspects of economic policy" ahead of next month's Budget.

Chancellor Philip Hammond welcomed the 'independent' think tank's view on the UK economy.

The OECD report also suggested the following steps to boost productivity and quality of work for those with fewest skills.

These included additional training and:

  • Investment in transport links within and between cities.
  • Restricting self-employment to independent entrepreneurs.
  • Granting zero-hours contract workers increased job security after three months.

Responding to the OECD report, a spokesperson for the Treasury said: "Increasing productivity is a key priority for this Government, so that we can build on our record employment levels and improve people's quality of life.

"Today, the OECD has recognised the importance of our £23 billion National Productivity Investment Fund which will improve our country's infrastructure, increase research and development and build more houses.

"In addition, our reforms to technical education and our ambitious Industrial Strategy will also help to deliver an economy that works for everyone."