Brexit: UK growth set to lag behind EU and other developed nations
This week the OECD published their latest interim economic outlook, and the news isn’t great for UK growth.
The report shows that the UK is set to lag behind the Eurozone and most other developed nations. In 2018 UK growth is expected to fall to 1 percent of GDP which is around half of the growth predicted for the USA and the Eurozone.
The report also highlights the UK’s rising inflation, rising debt, weak productivity and non-existent wage growth.
It should come as no surprise to anyone what the OECD says has caused the problem.
You guessed it, Brexit.
Here is a quote from the report.
Growth among the major advanced economies remains on pace. In the United States, growth is estimated at 2.1 percent in 2017 and 2.4 percent in 2018, supported by stronger consumer spending and business investment. Job creation has remained strong, but the extent to which fiscal easing and regulatory reform may provide an additional boost in 2018 remains uncertain.
The euro area is projected to grow at a 2.1 percent rate in 2017 and a 1.9 percent pace in 2018 – upward revisions from previous projections driven by stronger growth in key European countries.
Germany is forecast to grow by 2.2 percent in 2017 and 2.1 percent in 2018, France by 1.7 percent in 2017 and 1.6 percent 2018, while Italy will see a 1.4 percent growth rate this year and a 1.2 percent rate in 2018. The revised projections reflect stronger-than-expected performance in the first half of 2017, in the context of rising employment rates, accommodative monetary policy and reduced political uncertainty. The upswing is also driven by stronger consumption growth and investment, as well as healthy export growth.
In the United Kingdom, the previously identified growth slowdown is expected to continue through 2018, while uncertainty remains over the outcome of negotiations around the decision to leave the European Union. The unemployment rate has fallen to below 4.5%, but weak productivity and real wage growth persist. The depreciation of the sterling has modestly improved export prospects but also pushed up inflation. In this environment, the UK is projected to grow by 1.6 percent in 2017 and 1 percent in 2018.