A LEADING think-tank has told the UK Government to reverse Brexit if it wants to help the economy. In a damning report, the OECD says a U-turn on leaving the European Union – either via a second referendum or through electing a pro-EU government – would lead to a “positive impact on growth”.
If the current government continues with its “disorderly” Brexit and walks away from negotiations without an exit deal, then investment will wither away, and the pound will fall further, the influential Paris-based organisation says.
Already, the OECD says, Brexit has led to higher inflation, hitting spending and savings. It says the result is that the UK is likely to see growth of just one per cent next year.
?“The United Kingdom is facing challenging times, with Brexit creating serious economic uncertainties that could stifle growth for years to come,” OECD secretary-general Angel Gurria 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.
“Macro-economic and fiscal policy can and should continue to be 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 OECD said it has concerns about productivity in Britain, highlighting that it is weakest outside of greater London and the south east of England.
This disparity “may lead to, or be the result of, important differences among people in terms of income and wealth, jobs and earnings, and education and skills,” its report says.
With employment at high levels, the OECD says the Government needs to look at how labour and social policy can be “directed at improving job quality as well as the productivity of low-skilled workers”. The report suggests this could include investment in transport links in and between cities, further devolution to regions of England, additional training, and restricting self-employment to indep-endent entrepreneurs rather than allowing companies such as Deliveroo and Uber to use it as a means to get round hiring staff.
The OECD also recommends looking at ways to grant zero-hours contract workers increased job security after three months.
While the report admitted that Brexit negotiations were hard to forecast and that they could prove “more favourable” than it had assumed, the only way to avoid the gloom would be “an ambitious EU-UK agreement and a transition period to allow for adjustment to the new agreement”.
“Meantime, however, uncertainty could hamper domestic and foreign investment more than projected and hurt consumption even more were the exchange rate to depreciate even further,” the report said.
Gurria said: “It will be crucial that the UK and EU maintain the closest economic relationship possible.”
Responding to the report, a spokesman for the Treasury said: “Increasing productivity is a key priority for this Government, so that we can build on our record employment levels and improve people’s quality of life.
“The OECD has recognised the importance of our £23 billion National Productivity Investment Fund which will improve our country’s infra- structure, increase research and development and build more houses. In addition, our reforms to technical education and our ambitious industrial strategy will also help to deliver an economy that works for everyone.”
A Government spokesman later said there would be no more votes on the UK’s membership of the EU.
“We are leaving the EU and there will not be a second referendum,” he said.
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