It is odd, the OECD revealed data last week showing that it expects the UK to grow faster this year than it had previously expected. The ladies and gentlemen of the press were all over it. Yet they ignored the much more important prediction about next year.
Sometimes it’s better to let the picture do most of the talking.
It is pretty startling, isn’t it?
The OECD got 2016 wrong. Between June and September, it revised growth projections, but only by a small amount. Back in June, it had projected growth in the UK at 1.7%. Brexit happened, and then the OECD revised its estimates and as of September, it projects growth in the UK this year at 1.8%. So that means an upward revision of 0.1 percentage points.
At the same time, the OECD has been revising its projection for most of the rest of the world downwards. So you can see why the UK media has been all over the story, celebrating apparent evidence that Brexit is not so bad.
But this idea that a vote, a vote moreover that won’t be acted upon for two or three years, was going to adversely affect the UK economy within a few months was always absurd.
It was always going to take time. Indeed, in the short term, the fall in the pound and cut in interest rates has helped the UK economy.
But the OECD’s take on 2017 is far more dramatic. And it is telling that most of the media have ignored this.
Back in June, the OECD projected UK growth in 2017 at 2%. Now it is projecting growth at just 1%.
The UK is one of the few countries to see an upwards revision for 2016, but for 2017 the UK’s downward revision by the OECD was by far the highest among major economies.
In fact, the OECD has knocked a full percentage point off its projected UK growth for next year, compared to just 0.2 percentage points for the rest of the world. Of the major economies, only Italy has seen a comparable downgrade but even then not as great; the OECD has knocked 0.6 percentage points off its projections for Italy’s growth in 2017.