It feels like deja vu: a group of economic experts is proposing another referendum to decide if the UK should leave the EU or possibly reverse Brexit.
The idea was suggested by think tank the Organisation for Economic Cooperation and Development (OECD), saying that reversing the original Brexit decision would boost the UK economy instead of sending it into a downward spiral by leaving the EU. The plan was quickly shot down by the Treasury, but it has again gotten people discussing the economic pros and cons of leaving the EU.
OECD’s Analysis On UK’s Future
OECD, a group based in Paris with 35 of the world’s richest countries as members, said it would revise its pessimistic forecast of the UK’s future economy if the country were to stay in the EU. In order to make that happen, the group is calling for a second referendum that would essentially cancel the original Brexit poll and keep the UK in the EU.
“In case Brexit gets reversed by political decision (change of majority, new referendum, etc), the positive impact on growth would be significant,” the report said.
OECD previously predicted that the UK’s growth rate will fall to 1% in 2018, and believes that a “disorderly” exit from the EU single market and customs union could have long-term negative effects on trading relationships and economic growth. The group believes that recent British actions, including a drop in productivity and slowing export industries, have weakened the country’s economy even without Brexit—adding the future move to the mix only makes things worse.
The OECD admits that the outcome of the Brexit negotiations is hard to predict, but warns that “no deal” could lead to investments stalling, the pound hitting new lows, and the UK’s credit rating being cut once again. In making its predictions, the OECD assumes that trade talks will break down, leading to tariffs on imports and exports between the EU and UK.
In order to prevent long-term economic troubles after it leaves the EU, OECD says the UK must build the closet possible economic relationship with EU members.
Government’s Unhappy Response
Not surprisingly, government officials were not happy with OECD’s report.
“We are leaving the EU and there will not be a second referendum,” the Treasury said in a terse statement.
Chancellor Philip Hammond had a more diplomatic response, saying the UK would consider the OECD’s report and act where it could. He once again talked about the benefits to the UK and its companies if the country is to have a limited transitional period after leaving the EU instead of having things cut off immediately.
“[By] delivering a time-limited transition period, avoiding a disruptive cliff-edge exit from the EU, we can provide greater certainty for businesses up and down the UK, and across the European Union,” he said.
Politicians who have long been in favour of leaving the EU were critical of an organisation trying to step in when the country already voted to leave. They say the UK Brexit plan won’t change because of the thoughts of one organisation. However, many did admit that the OECD report brought up important economic issues, such as productivity and inflation, that need to be addressed so the economy can grow.
The report was fuel to the fire of politicians who were never in favour of leaving the EU.
“The case for protecting the economy by reversing Brexit is getting stronger by the day,” said Jo Swinson, deputy leader of the Liberal Democrats. “Once the facts are clear at the end of this process, the British people must have the final say with a chance to exit from Brexit.”
Brexit has been a touchy subject since even before the original votes were cast, and if the OECD report is any indication, its controversy isn’t going away anytime soon.