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The latest OECD Economic Survey of the United Kingdom details developments since the June 2016 vote to leave the EU, highlighting growing uncertainties and a number of risks. This includes the hit on households’ purchasing power from higher inflation, declining savings rates, and a fall in net migration. It lays out a range of policy options for meeting the challenges posed by Brexit and building a stronger and more inclusive U.K. economy going forward.
“The United Kingdom is facing challenging times, with Brexit creating serious economic uncertainties that could stifle growth for years to come,” Mr Gurría said. “Maintaining the closest economic relationship with the European Union will be absolutely key, for the trade of goods and services as well as the movement of labour. Macroeconomic and fiscal policy can and should continue being used to support the economy, both during and after the exit negotiations. Future prosperity will depend on new reforms to improve job quality, boost labour productivity and ensure that the benefits are shared by all.”
The Survey says that sustained economic progress will hinge on a successful outcome to negotiations with the EU and those still to come with other countries. It recommends efforts to ensure high value chain integration for network industries and high levels of access for services sectors to overseas markets. [...]
The Survey says that addressing the regional productivity divide – between high-productivity areas like London and Southern England and lower-productivity regions in the North – can be a key channel for fostering long-term growth and sharing prosperity across the country. As part of the industrial strategy, locally and regionally focused investment in transportation and housing would boost the productivity-enhancing effects of agglomerations. Further decentralisation should include increased local authority oversight over property taxes. [...]
OECD Economic Survey of the United Kingdom