Reversing Brexit would give ‘significant’ boost

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LONDON: Reversing Britain’s shock referendum to leave the EU would ‘significantly’ boost the economy, the OECD said on Tuesday, while the government insisted there were no plans to cancel Brexit.

“In case Brexit gets reversed by political decision (change of majority, new referendum, etc) the positive impact on growth would be significant,” the Organisation for Economic Co-operation and Development (OECD) said in a new report.

The Treasury responded saying: “We are leaving the EU and there will be no second referendum.”

A spokesman for British Prime Minister Theresa May also reiterated the government’s position that there should not be a second referendum, with Brexit due to take place in March 2019.

The OECD meanwhile left its economic growth forecasts for Britain unchanged at 1.6 per cent in 2017 and one per cent in 2018.

The OECD, which advises industrialised nations on economic policy, said Britain should seek to maintain close economic ties with the European Union to weather the impact of Brexit.

The Paris-based organisation warned that a ‘disorderly Brexit’, one in which no trading relationship was arranged, would constitute a medium-term shock to Britain’s economic growth prospects.

“Business investment would seize up, and heightened price pressures would choke off private consumption,” the organisation said.

“Negotiating the closest possible EU-UK economic relationship would limit the cost of exit.”

Britain voted to leave the EU in a shock referendum in June last year.

Speaking to MPs earlier, Bank of England governor Mark Carney blamed a pick-up in inflation to 3.0 per cent on the tumbling value of the pound since the Brexit vote, and said that a transition agreement for Britain’s withdrawal from the EU was in “everyone’s interest”.

The country must now “stay calm and carry on”, said OECD Secretary-General Angel Gurria at the presentation of the report.

Asked whether the UK should pursue a longer transition period for exiting the EU, Gurria said: “Common sense was invented by the British – if you need more time then give it more time.”

The OECD also said that Brexit could exacerbate Britain’s existing productivity problem by increasing uncertainty and reducing business investment. — AFP