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Tuesday, December 01, 2020

OECD warn about no deal Brexit

Yet more warnings about a no deal Brexit today with the OECD claiming that such an outcome at the end of this month would deliver a “serious” short-term hit to the UK economy and produce a “strongly negative” effect on trade, productivity and jobs in the long term.

The Independent reports that the Organisation for Economic Co-operation and Development said that disruption from failure to conclude a trade deal with the EU would come as the UK grapples with the impact of a second wave of coronavirus:

The international economic think tank downgraded its outlook for the UK economy, estimating an 11.2 per cent fall in GDP for 2020, followed by a slower-than-expected recovery, with growth of 4.2 per cent next year and 4.1 per cent in 2022.

With just 30 days to go to the UK leaving the EU’s single market and customs union, talks on a future relationship remain in stalemate over access to fishing stocks in British territorial waters and Brussels’ demand for a level playing field on standards.

The government’s official forecaster, the Office for Budget Responsibility, has projected a 2 percentage point reduction in GDP in 2021 if no deal is in place by 31 December.

In an assessment of the UK’s prospects contained in its six-monthly global Economic Outlook, the OECD said: “The failure to conclude a trade deal with the European Union by the end of 2020 would entail serious additional economic disturbances in the short term and have a strongly negative effect on trade, productivity and jobs in the longer term.

“By contrast, a closer trade relationship with the European Union than expected, notably encompassing services, would improve the economic outlook in the medium term.”

The OECD forecasts suggest the UK will suffer one of the biggest contractions in the G20 group of countries in 2020.

By contrast, the US economy is forecast to shrink by 3.7 per cent, Germany by 5.5 per cent and France by 9.1 per cent in a year when the global economy has been convulsed by the impact of Covid-19. China’s GDP is forecast to grow by 1.8 per cent.

The OECD’s most recent previous prediction saw a 10.1% fall in UK GDP over 2020.

Our problem of course is that nobody in a position to do anything about all this is listening.
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