UK growth to remain under pressure: OECD

PARIS: UK growth will remain anaemic for the next two years even if a Brexit deal is reached amid signs of an “entrenched” global downturn, a major international organisation has warned.In its latest global outlook report, the Organisation for Economic Cooperation and Development (OECD) slashed its forecast for global growth once more, to 2.9 per cent for 2019 and 2020 — the weakest pace since the financial crisis.The Paris-based think tank said worldwide expansion will edge only slightly higher to 3 per cent in 2021. It had previously predicted global growth of 3.2 per cent in 2019 and 3.4 per cent in 2020.The downgrades come amid global trade woes, with the US-China dispute impacting the world’s two largest economies. The OECD said: “The global outlook is fragile, with increasing signs that the cyclical downturn is becoming entrenched. “GDP (gross domestic product) growth remains weak, with a slowdown in almost all economies this year, and global trade is stagnating.”The gloomier worldwide conditions are heaping further pressure on Britain’s economy as Brexit uncertainty also takes its toll, according to the OECD.It is predicting Britain’s economy will grow by 1.2 per cent this year and fall to 1 per cent in 2020 before edging back up to 1.2 per cent in 2021, with business investment slowing and the labour market showing signs of strain.The forecasts for 2019 and 2020 remain unchanged on its forecast in May. But the OECD reiterated warnings over the impact of a no-deal Brexit, saying a cliff-edge withdrawal would “significantly damage” the economy. It forecasts that UK GDP could be 2 per cent to 2.5 per cent lower in the first two years under a no-deal Brexit scenario and said the Bank of England may need to slash rates by 0.5 per cent to help offset the impact. But even if a deal is agreed, it cautioned the recent uncertainty will cause lingering effects.It said: “Investment growth will recover as uncertainty regarding the nature of Brexit is assumed to diminish gradually, but it will remain low. “With the continued weakness in world trade, exports are set to grow only very modestly.”The OECD called for central banks and governments across the world to consider taking action to boost activity given the global slowdown.

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