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Economic growth is projected to increase slightly in 2019 before slowing in 2020, on the assumption that there is a smooth exit from the European Union. Some Brexit-related uncertainties will remain until there is clarity about future trading arrangements. An expansionary fiscal stance and a slow recovery in exports are expected to support growth, while the monetary stimulus will be gradually withdrawn. Inflation is projected to converge to 2% by the end of 2020.
With inflation above target and large uncertainties remaining, monetary policy should normalise at a very gradual pace. The fiscal impulse is expected to peak in 2019. The authorities should stand ready to respond further if demand weakens significantly as a result of Brexit. Economically, the preferred Brexit option should be to forge an agreement that will ensure the closest possible trading relationship with the European Union and high access for financial services to overseas markets. Temporary measures will be needed to cushion the economy and support displaced workers in the event of a no-deal exit.
1. Covers 17 countries that are both euro area and OECD members.
2. Projections from 2018Q4.
Source: OECD Economic Outlook 104 database.
1. Data for the unemployment rate refer to the population aged 16 and over. Data for the labour force participation rate refer to the population aged between 16 and 64.
2. Real average weekly earnings excluding bonuses. Earnings have been deflated by the consumer price index including owner occupiers' housing costs.
Source: Office for National Statistics.
Economic Survey of United Kingdom (survey page)
The Economic Consequences of Brexit: A Taxing Decision (main web page with paper)