OECD warns of Brexit "negative shock"

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Reuters

The UK’s economy would suffer “a large negative shock” if it left the EU, says the Organisation for Economic Co-operation and Development.

By 2020, GDP in the UK could be more than 3% below the level it might otherwise have been if it had remained in the EU, the OECD says.

In the rest of the EU, GDP would be about 1% weaker as a result, it says.

Lower trade openness would hit the UK’s economic dynamism and productivity in the long term too, it adds.

“The weaker UK economy, as well as possible new restrictions after exit from the European Union, would lower net migration inflows, adding to the supply-side challenges by reducing the size of the labour force,” the OECD says in its latest economic outlook.

“Some of these effects could be offset by reductions in domestic regulatory burdens, but the overall net effect on living standards would be strongly negative.

“By 2030, UK GDP could be over 5% lower than otherwise if exit had not occurred.”

The impact of a Leave vote would not be merely confined to the EU, says the OECD, which warns of “substantial negative consequences for the United Kingdom, the European Union and the rest of the world.”

“Weaker demand in the European economies also adversely affects the rest of the world, with GDP in the Brics and other non-OECD economies lowered by over half a percentage point by 2018,” the OECD says.

“Within these groups, Turkey and Russia are relatively heavily hit, reflecting their comparatively strong trade linkages with the European economies.”

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OECD warns of Brexit "negative shock"
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