The UK has been governed by the Conservative party since 2010; in coalition with the Liberal Democrats (2010-15) and in its own right 2015 to date). It presided over a period of austerity which it claimed was necessary to rebalance the economy in the wake of the Global Financial Crisis and the ensuing weak global recovery. It was a proud boast of the Conservatives that UK economic growth was the strongest of any of the G7 nations, providing an implicit endorsement of its economic policies and stewardship.
However, the Brexit decision in 2016 has plunged the UK into economic uncertainty (even before the country actually leaves the EU) and this is having an effect on the nation’s growth at a time when global demand is strengthening. The latest organisation to read the writing on the wall for the UK economy is the OECD.
According to their most recent analysis, OECD is predicting that the UK economy will enjoy the smallest growth of any G20 nation in 2018, with a projected growth of 1.3%. The figure is an upgrade from an earlier projection of 1.2% On the brighter side, OECD is projecting global growth for 2018 will come in at 3.9% this year and next which would be the best performance since 2011. It cautioned that any trade wars would be likely to hurt jobs and growth.
The acting chief economist at OECD defended the organisation’s predictions for the UK economy noting: “[Ahead of the referendum] we were talking about rates of growth of around 2% for the UK. Right now, we are talking about substantially lower rates of growth. We have not changed our view on Brexit. We do think that it’s very important for the UK to invest more in productivity enhancing infrastructure. A lot of investment happens in London, it doesn’t happen in many other areas. More needs to be done to enhancing productivity in the rest of the UK.”