OECD Cuts U.K. Outlook as Brexit Uncertainty Weighs on EconomyBy
Paris-based group slashes 2017 U.K. growth forecast to 1%
Report warns that downside risks to the outlook remain
The Organization for Economic Cooperation and Development cut its U.K. growth forecast and said the economy may weaken further despite the signs of stabilization since the shock of the Brexit vote in June.
In its Interim Economic Outlook on Wednesday, the Paris-based body said the economy will expand 1 percent in 2017. That’s just half the pace it projected in early June, before the referendum to leave the European Union.
Surveys show the economy has fared better than predicted since the Brexit vote, and the OECD cited “prompt action” by the Bank of England, which unleashed new stimulus in August, as a factor. The OECD, which had warned that leaving the EU was a major risk, said economic developments so far are broadly consistent with the “more moderate scenarios” set out prior to the vote.
“Uncertainty about the future path of policy and the reaction of the economy remains very high and risks remain to the downside,” the OECD said. “In the longer term, the U.K.’s future trading arrangement with the EU and other partners will be critical to its economic prospects.