According to the estimates of the Organisation for Economic Development and Cooperation (OECD), is there is a no-deal Brexit, the economic growth and the growth in the GFP of the United Kingdom will drop to 1 per cent for next year.

If the British parliament passes Boris Johnson’s Brexit deal before the 31 January deadline, the economic growth rate will slow down to 1 per cent next year about 1.2 per cent in the current year, predicted the OECD and will return back to 1.23 per cent growht the year after in 2021.

The UK will be left more exposed a global downturn and there would be significant damage to the country’s economy of the UK leaves the European Union without a deal, warned the OECD.

The OECD had predicted earlier this year that almost 3 per cent would be shaved off the economic growth of the UK over a period of three years if the country left the EU without a deal on 31 October. The OECD said: “An exit from the EU without an agreed deal would significantly damage the economy, especially if it triggers turbulence in financial markets” but did not put a figure on how much it would cost in lost growth from 2020.

“The UK economy is also exposed to global financial risks, a further slowdown in the world economy and rising protectionism”, said the OECD while referring to the ongoing trade war between China and the United States in its biannual health check of the global economy.

The comments from the OECD assume importance because it is entrusted with management and coordination of the policies and research for 36 of the world’s richest countries. The latest warning from the think tank was also accompanied with call to the powerful trading countries to help subdue the war of words ongoing over import tariffs and work together to further reduce the trade barriers.

While the UK showed especially low rates of investment and growth, the OECD also noted a slowdown across the world economy that had all the classic signals of an “entrenched” period of stagnation, said the organization’s chief economist.

“Our biggest fear is that investment spending persists at the current very low levels,” Laurence Boone said. “Cooperation between nations has to do with restoring stability and establishing a safe platform for investment.”

Further the OECD noted that business investments were being held back by policies to cope with the rise of digital commerce and a failure of governments to devise adequate responses to the climate emergency. It further stated that the policy and strategy makers of companies are waiting to see the kind of policies on government spending and taxes were being adopted in various countries.

The OECD said that the global economy is likely to slow down to as growth rate of 2.9 per cent for the current year and would then stabilize again in 2021. The organization predicted that global economy will bounce back to a 3 per cent growth rate in 2022.

(Adapted from TheGuardian.com)

Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability, Uncategorized