OECD warns of uncertain outlook for UK, forecasts 1.2 pct growth in 2017

The Paris-based Organisation for Economic Cooperation and Development (OECD) in its latest global outlook published on Monday warned of an uncertain outlook for the UK and its trading partners as Brexit negotiations began.

The OECD urged the new chancellor Philip Hammond’s to go further as it noted last week’s autumn statement to abandon George Osborne's strict borrowing rules. It said that a more significant increase in public investment would support demand in the near term and boost supply in the longer term.

In its September forecast, the OECD backtracked on its earlier warning that the UK would suffer instant damage from the Brexit vote. The latest outlook saw betterment as the thinktank now forecasts UK GDP would have grown 2.0 percent this year, a touch higher than the 1.8 percent it predicted in September.

The forecast for 2017 was lifted to 1.2 percent from 1.0 percent in September, but still remains as the weakest since the global financial crisis in 2009 and is slower than the 1.4 percent forecast by the Bank of England (BoE) and the Office for Budget Responsibility (OBR).

For the eurozone, the OECD predicts growth will remain subdued with some impact from the Brexit vote. Within the eurozone, Greece is expected to return to modest GDP growth next year, Germany’s growth is forecast to “remain solid” and France’s growth is seen increasing “gradually”. It however notes that next year’s election created “considerable uncertainty”.