UK economy will outgrow and outperform Eurozone over the next decade in blow to Brexit doom-mongers, think-tank predicts
OECD has revised its forecast for Britain up to 2% for this year and 1.2% in 2017 in defiance of Project Fear
THE UK’s economy will outgrow and outperform the Eurozone over the next decade, according to a global think-tank.
The predictions are a blow to the Brexit doom-mongers, as the OECD has revised its forecast for Britain up.
It expects the economy to expand by 2% this year and then by 1.2% next year - both 0.2% higher than its previous figures from September.
And in another knock to ‘Project Fear’, the pro-EU campaign to spread fear a vote to leave the EU would damage the nation’s finances, the OECD also predicts that UK plc will outperform the Eurozone over the next decade.
Its report suggests annual growth here will average 2% between 2017 and 2026, while in Europe it will be down at 1.5%.
The row was reignited last week in the wake of Philip Hammond’s Autumn Statement, when the Chancellor revealed the independent Office for Budget Responsibility said it thought Brexit would add £60billion to government borrowing by 2021.
But the OECD said the Bank of England's moves to shore up the economy since the EU referendum have boosted consumer confidence.
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It also believes the UK will be handed the best possible trading terms with EU countries after we exit in 2019.
The think tank said: “Monetary policy has mitigated the immediate impact of the shock by stabilising financial markets and shoring up consumer confidence.
“This projection assumes the United Kingdom will operate with a most favoured nation status after 2019, but there is considerable uncertainty about this, which will increasingly weigh on growth, and in particular private investment, including foreign direct investment.”
It added that higher inflation in the next few years could hit households' purchasing power, and as growth slows, “the unemployment rate is projected to rise”.
It had previously warned Britain's decision to leave the EU could result in a 3% loss in GDP by the end of the decade.
On the global economy, the OECD said the world was still languishing in a “low-growth trap”, but pushed up its projections for 2017 by 0.1% to 3.3%.
“Around the world, private investment has been weak, public investment has slowed, and global trade growth has collapsed, all of which have limited the improvements in employment, labour productivity and wages needed to support sustainable gains in living standards,” the OECD said.
The Paris-based organisation was slightly more optimistic about the US outlook since President-elect Donald Trump’s victory, with a forecast for growth next year of 2.3% - up from 2.1%.