LONDON — The UK could consider reversing Brexit, the Organisation for Economic Cooperation and Development said on Tuesday, saying that doing so would give a “significant” boost to Britain’s ailing economy.
The OECD released its latest economic survey of the UK on Tuesday, and argued that should the UK decide to change course on Brexit, either through a second referendum, or a new government deciding that leaving the EU is not in Britain’s best interests, the gains to the economy would be substantial.
“In case Brexit gets reversed by political decision (change of majority, new referendum, etc.), the positive impact on growth would be significant,” the OECD’s survey said.
Since Britain voted to leave the European Union last June, the country’s economy has slowed significantly. Growth in the first two quarters of 2017 was just 0.2% and 0.3% respectively, while inflation has surged, squeezing the incomes of regular Brits in the process.
Britain could address this sclerotic growth and income squeeze simply by remaining in the EU, the report says, noting that leaving the EU could knock as much as £40 billion off the UK’s GDP growth by the end of 2019.
Britain risks a so-called “no deal” Brexit where talks with the EU break down and the UK simply falls out of the bloc without any sort of agreement about the two parties’ new relationship.
Here’s the scenario described by the OECD as a “disorderly Brexit”:
“A break-up of EU-UK negotiations, cancelling out the prospect of a trading relationship in the foreseeable future, would trigger an adverse reaction of financial markets, pushing the exchange rate to new lows and leading to sovereign rating downgrades. Business investment would seize up, and heightened price pressures would choke off private consumption. The current account deficit could be harder to finance, although its size would likely be reduced.”
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