Another day, another Brexit horror story, this time the OECD (The Organisation for Economic Cooperation and Development) has cut the UK’s growth target in half, by a whole percentage point.
These forecasts have been reduced due to the impact of Brexit and a wider weakness in the broader global outlook.
The report states: “While markets have since stabilised, sterling has depreciated by around 10% in trade-weighted terms since the referendum. For 2016, GDP growth has been supported by a strong performance prior to the referendum, even though business investment contracted.
“Developments to date are broadly consistent with the more moderate scenarios set out prior to the referendum and reflect prompt action by the Bank of England in August. However, GDP is projected to slow to 1% in 2017, well below the pace in recent years and forecasts prior to the referendum.
“Spillovers to the global economy, notably the euro area, have been modest so far, including through confidence and financial markets weighing on investment; more negative effects on the euro area are likely to become apparent in 2017.”
The OECD also downgraded the global growth predictions from 3% to 2.9%. A slowdown in the Chinese economy is likely to slow down the worldwide economy.
The OECD was a supporter of ex-Chancellor George Osborne’s austerity plans, however they have called on his replacement, Philip Hammond, to increase public spending, hoping that this investment will boost the beleaguered economy.