Reversing Brexit Would Help UK Economy, OECD Think Tank Suggests

Reversing Brexit Would Help UK Economy, OECD Think Tank Suggests

The Organisation for Economic Co-operation and Development (OECD) also warned that the UK's growth would be hit hard if it quits the European Union without a trade deal.

The OECD repeated its forecast from September that Britain's economy looks likely expand by only 1.0% next year, slowing from growth of around 1.6% this year.

The OECD admitted that Brexit negotiations were hard to forecast and could "prove more favourable" than assumed in its report - boosting trade, investment and growth - but stressed that this would require "an ambitious EU-UK agreement and a transition period to allow for adjustment to the new agreement".

But it warned the very real threat of no deal would spark a sharp reaction by financial markets, sending the exchange rate to new lows and leading to a downgrade in the UK's sovereign rating.

"Business investment would seize up, and heightened price pressures would choke off private consumption", the organisation said.

To avoid such a scenario, the OECD suggested that a new referendum - or a change in Theresa May's majority - would have a "positive" impact on growth if it led to Britain staying in the EU.

"[By] delivering a time-limited transition period, avoiding a disruptive cliff-edge exit from the EU, we can provide greater certainty for businesses up and down the United Kingdom, and across the European Union", Mr Hammond said.

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.

"The Prime Minister needs to act to protect our economy".

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Asked whether the United Kingdom should pursue a longer transition period for exiting the EU, Gurria said: "Common sense was invented by the British - if you need more time then give it more time".

"The Government can avoid this if they drop their ideological and self-imposed red lines and start negotiating for continued membership of both the single market and the customs union".

The 140-page OECD report also says there's a need to improve productivity.

But the think-tank also admitted that quitting the bloc could "prove more favourable" than assumed in its report and that it could boost trade and growth.

It says rules should be tightened to restrict self employment to "truly independent entrepreneurs".

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.

The report added: "Well-being inequalities may have been one of the causes of Brexit, as less-educated workers in remote regions might have perceived to benefit less from the European project".

The treasury shut down the OECD's intervention.

Responding to the OECD report, Britain's finance ministry said increasing productivity was already a priority, citing its 23 billion-pound fund for infrastructure, research and development and housing.

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