Brexit Could Have Been Worse For The UK, Says Economists

Brexit’s not that bad really, says economists who forecast recession and financial chaos after the June referendum to leave the European Union.

As the world moves on, successive companies claim they have suffered no downturn on their profits from Brexit.

The Organisation of Economic Co-Operation and Development (OECD) even reckons Britain will be the only economy to push on with growth this year – although tougher times are expected in 2017.

The international group, which acts as an economic talking shop for close to 40 leading world economies, has revised a forecast for British GDP growth up by 0.1% to 1.8% for the rest of the year.

Similar forecasts for other major world economies were also revised by the OECD – but all lost ground.

Global growth stalls

The US is likely to fall by 0.4% to 1.4% growth, the Eurozone by 0.1% to 1.5% and Japan by 0.1% down to 0.6%.

Looking at the global economy, the OECD expects forecast growth to remain the same – at about 3%.

“Overall, the world economy remains in a low-growth trap with persistent growth disappointments weighing on growth expectations and feeding back into weak trade, investment, productivity and wages,” says the OECD.

“This in turn leads to a further downward revision in growth expectations and subdued demand. Poor growth outcomes combined with high inequality and stagnant incomes are further complicating the political environment, making it more difficult to pursue policies that would support growth.”

Brexit fall out

For Britain, the OECD sees the economy reflecting a quick response to Brexit by the Bank of England cutting interest rates and introducing more stimulus.

“GDP is projected to slow to 1% in 2017, well below the pace in recent years and forecasts prior to the referendum,” says the OECD.

“Uncertainty about the future path of policy and the reaction of the economy remains very high and risks remain to the downside. In the longer term, the UK’s future trading arrangement with the EU and other partners will be critical to its economic prospects.”

Economists also expect the fall-out from Brexit to drag down economic performance in the EU in 2017 as business confidence and investment wanes when negotiations to leave Europe are expected to start early in the year.