OECD Downgrades UK Economic Growth Forecast
A major international organisation, the Organisation for Economic Co-operation and Development (OECD), has revised its forecasts for UK economic growth over the next two years, citing concerns over the possibility of a no-deal Brexit.
Revised GDP Growth Predictions
- 2018: Revised from 1.4% to 1.3%
- 2019: Revised from 1.3% to 1.2%
The OECD’s chief economist emphasized the importance of reaching a Brexit deal that maintains close links between the UK and the European Union to support economic growth.
Comparison with Eurozone Growth
The OECD’s Interim Economic Outlook shows that the UK is projected to lag behind the eurozone in terms of GDP growth.
- Eurozone GDP Growth: 2% in 2018 and 1.9% in 2019
Global Economic Concerns
The report also highlights global economic challenges, including a slowdown in trade due to political instability and protectionist trade policies.
- Retaliatory tariffs between the USA and China have led to a marked slowdown in global trade.
- US imports of steel from China and Chinese imports of American cars have significantly decreased.
Impact of Trade Barriers
OECD chief economist Laurence Boone warned about the negative effects of trade barriers on consumers and the economy.
- Prices of washing machines for US consumers increased by 20% due to trade barriers.
- Higher tariffs can lead to higher prices, reduced investment, job losses, and lower productivity.
Global GDP Growth Forecast
The OECD downgraded its global GDP growth forecast from 3.9% to 3.7%, citing weakened confidence, slower trade and investment growth, and modest wage growth.
Impact of Brexit on Europe
Mr. Boone highlighted political risks in Europe, with Brexit being a significant source of uncertainty that could affect growth and social cohesion.
He stressed the importance of reaching a Brexit deal that maintains a close relationship between the UK and the EU.