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By
Fibre2Fashion
Published
Oct 24, 2017
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OECD urges UK for close EU ties to meet Brexit challenges

By
Fibre2Fashion
Published
Oct 24, 2017

The British economy has weakened following the decision to leave the European Union (EU) in June 2016. Maintaining close ties with the EU and implementing policies to boost productivity will be key to maintaining future living standards, according to an economic survey of the United Kingdom by the Organisation for Economic Cooperation and Development (OECD).


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The growing uncertainties and risks post Brexit include the hit on household purchasing power from rising inflation, declining savings rates and a fall in net migration, an OECD press release said quoting the survey.
The survey, presented in London recently by OECD secretary general Ángel Gurría and British finance minister Philip Hammond, identifies priority areas for future action, including new productivity-enhancing fiscal initiatives and comprehensive policy reforms to boost the economic performance of lagging regions.

Sustained economic progress will hinge on a successful outcome to negotiations with the EU, the survey says. It recommends efforts to ensure high value chain integration for network industries and high levels of access for services sectors to overseas markets.

The survey suggests that the government consider swift deployment of productivity-enhancing investment initiatives if the low-growth trap continues. It also notes scope for a tax and spending review, to identify additional fiscal initiatives, including the potential for higher national Income contributions for the self-employed and indexation of state pensions on average earnings only.

Addressing the regional productivity divide – between high-productivity areas like London and southern England and lower-productivity regions in the north – can be a key channel for fostering long-term growth and sharing prosperity across the country, the survey says.

With employment at high levels, labour and social policy should be directed at improving job quality as well as the productivity of low-skilled workers, it adds.

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