Economy ‘will grow without deal’
THE economy will continue to grow next year even if the UK remains on a path to leave the European Union without a deal, an influential think tank said yesterday despite comparing Brexit to the Blitz.
The OECD, an organisation partfunded by Britain, yesterday warned that Brexit could “stifle growth for years to come” and suggested a second referendum would have a “significant” positive impact on the economy.
However, the organisation’s own forecast suggested that even in the “least favourable scenario” of the UK leaving without a deal in 2019 the economy will grow by 1 per cent next year.
Philip Hammond, the Chancellor, faced a furious response from Eurosceptic Tory MPS yesterday for helping launch the report in the Treasury. Mr Hammond tried to distance himself from the findings, insisting that the UK will leave the EU in 2019 and ruling out a second referendum.
However, one Tory MP said: “He’s associating himself with Project Fear all over again, it’s shocking behaviour. He has to go.”
Government sources suggested that Mr Hammond had been “ambushed” by the OECD and was unaware of the contents of the report until shortly before the launch.
The OECD said there was a risk of a “disorderly” Brexit, in which the UK leaves without a deal, causing an “adverse reaction” in financial markets and pushing exchange rates to new lows.
It goes on to say: “In case Brexit gets reversed by political decision (change of majority, new referendum, etc), the positive impact on growth would be significant.” Angel Gurria, the secretary-general of the OECD, said: “What was it Churchill said? Keep calm and carry on. It’s like in the Blitz. Except without the bombs.”
The OECD admitted that Brexit negotiations were difficult to forecast, and could “prove more favourable” than assumed – boosting trade, investment and growth – but stressed that this would require “an ambitious EUUK agreement and a transition period to allow for adjustment”.
Gisela Stuart, a leading Leave campaigner, said: “It is laughable that the Eu-funded OECD has the gall to intervene in our negotiations and call for Brexit to be reversed. Instead of trying to hijack Brexit talks, the OECD should urge its financial backers in the European Commission to negotiate in good faith and stop trying to bully the UK into submission.”