This article was last updated on April 16, 2022
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The Organization for Economic Cooperation and Development has retracted its warning issued ahead of Brexit vote regarding the negative effects of the move due to the policies implemented by Theresa May. According to the Paris-based thinktank’s revised forecast, more growth is anticipated this year as a result of a stronger-than expected performance in the first half of 2016 and action by the Bank of England in August to spur activity.
The report highlighted that an appropriate reaction by the new chancellor, Philip Hammond, to increase public spending in his first major policy statement has prevented the anticipated decline. However, it was still highlighted that a steep decline in the economy continues as a threat but it is safely delayed until 2017. The report mentioned that “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.”
According to the interim economic outlook published by OECD, “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.” The report further highlighted that “spillovers to the global economy, notably the euro area, have been modest so far, including through confidence and financial markets weighing on investment.”
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