According to the Organization for Economic Cooperation and Development (OECD), the impact of Brexit on the UK economy is likely to be a “sharp slowdown” in growth.
The multilateral think tank, which has its headquarters in Paris, France, has projected in its November forecast that the UK’s GDP will drop from 1.5% this year to 1.2% in 2018 and says that in 2019 - the official year in which the country is set to leave the EU - growth will drop still further to 1.1%.
According to the OECD, the expectation of a slowdown in growth in the UK economy arises from the ongoing uncertainty over the outcome of Brexit negotiations, as well as the “impact of higher inflation on household purchasing power.” These figures represent a slight variation, however, on those published in the OECD’s September forecast which anticipated growth of only 1% in 2018.
The organization explains that “the upward revision of 0.2 percentage points for 2018,” in part reflects “the slower pace of fiscal consolidation” announced in the recent UK Budget, as well as the revision in their “technical assumption,” that by the time the UK leaves the EU in March 2019, the country will have secured a trade and regulation transition agreement rather than no deal at all.
At the projected 2018 growth rate, the UK will share the title of the “weakest of the 19 countries covered by the OECD,” says The Independent, “with the sole exception of South Africa, which is projected to grow by only 1% next year.”
While admitting that the outlook could improve if Brexit proves to be “less disruptive” than anticipated, the OECD warned that “UK authorities should stand ready … to support investment,” in the event that “growth weakens significantly ahead of Brexit.”