UK OUTGUNS EUROPE ON GROWTH
Brexit boost as experts say we’ll outstrip France and Germany
THE UK economy is set to power ahead this year, leaving the crisis- torn eurozone trailing.
A report from leading international economists predicts Britain will be the fastestgrowing major economy in the developed world this year.
But France and Germany are set to falter, according to the Organisation for Economic Cooperation and Development.
The bleak analysis for the continent will be seen as a major boost to the campaign to leave the European Union in this summer’s referendum. Eurosceptics will claim Britain would be better off free from Brussels bureaucracy and the stagnation and austerity at the core of the European project.
The Paris-based OECD thinktank warned of ‘growing challenges to maintain political support for the European project’. It cited the surge in refugees, security threats and the unpopularity of austerity measures as risks.
The report said uncertainty in Europe was having a dramatic impact on business investment – denting hopes of recovery.
George Osborne said the report was ‘another demonstration of the cocktail of risks facing the world’.
The OECD trimmed its forecasts for economic growth in the UK this year from 2.4 per cent to 2.1 per cent as it slashed the outlook for countries around the world. But growth of 2.1 per cent is still better than the 2 per cent forecast for the United States and 1.4 per cent expected in the eurozone.
Britain’s growth rate will slip to 2 per cent next year but will continue to outpace that of the largest eurozone states – Germany, France and Italy. The dramatic finding undermines claims made by advocates of the ‘stay’ campaign, including the CBI, that business investment and inward investment to the UK would suffer outside the EU.
The head of Germany’s business lobby group this week warned that ‘a divided Europe would sink into oblivion’ if Britain left the EU.
Markus Kerber, director general of the BDI in Germany, said: ‘A Brexit would lead to a dead end. Only a unified Europe will be successful on the global scene. A divided Europe will sink into oblivion.’
Michel Guilbaud, of the MEDEF business group in France, said: ‘For France and for Europeans, a Brexit would be a major step backward.’
Matthew Elliott, chief executive of the Vote Leave group leading the campaign for Brexit, said: ‘The language of the various business groups reflects the dire position of the eurozone and its inability to face up to global problems. Of course they may want Britain to remain to pick up their bills but for voters in this country the only safe option is to vote to leave.’
The OECD warned that uncertainty in the eurozone – including over the outlook for the economy and the refugee crisis – was hitting investment and could increase stress in the financial system.
‘This uncertainty risks dampening investment further and could lead to more difficult financial conditions, which would depress already weak growth in Europe and elsewhere,’ the OECD said. ‘Europe needs to regain a sense of self and speak with a single voice to promote unity and growth.’
It is demanding ‘ collective action’ by the EU to pull it out of its slump. It advocates reforms in terms of integration across the single market including more harmonisation of regulation, anathema to much of the UK’s business community, and investment in long- term infrastructure projects.
Britain has begun to respond to this challenge with the completion of Crossrail, the northern industrial powerhouse, investment in HS2 and the Thames Tideway tunnel.
Europe’s problems are being compounded by financial instability and the collapse of world trade. The OECD said the European Investment Bank needed to take a ‘ higher risk’ approach to the projects it backs. It noted that the first six weeks of this year were ‘exceptionally bad’ for global stock markets.
It traces the uncertainty back to the fall in the exchange rate for the Chinese currency the renminbi and notes that bank shares have been particularly hard hit.
‘Cocktail of risks’ ‘Speak with a single voice