According to the latest forecast by the Organization for Economic Co-operation and Development (OECD), economic growth in Great Britain will come to a standstill in the coming year.
(Photo: Bloomberg)
It was a quirk of the diary that the Bank of England warned of a protracted economic crisis in Britain on the day that the government crisis in Whitehall reached a new high in the evening. “The global economic outlook has deteriorated noticeably,” said Fed Chairman Andrew Bailey when presenting the semi-annual Financial Stability Report on Tuesday.
He had previously predicted that Britain would be hit harder and longer than other leading industrial nations by the downturn in the global economy.
The British economy is currently experiencing one of the worst economic downturns in the past 50 years.
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According to the latest forecast by the Organization for Economic Co-operation and Development (OECD), economic growth will come to a standstill in the coming year. According to the Bank of England forecast, the inflation rate could rise to more than eleven percent by October. Great Britain is thus stuck in a classic stagflation dilemma and is in the worst economic position of the seven major industrial nations.
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Brexit is now showing its true colors
In addition, the negative consequences of Brexit are now becoming increasingly apparent. During his visit to London last week, EU Deputy Commissioner Maros Sefcovic pointed out that trade from Great Britain to the European single market had fallen significantly last year compared to 2019. The Slovak attributed the drop to tightened trade controls following Britain’s exit from the EU.
Under pressure: The collapse of the British economy puts Boris Johnson under pressure.
(Photo: Bloomberg)
This assessment is supported by the forecast of the state Office for Budget Responsibility. The think tank had already warned in March 2020 that Brexit would further slow down productivity in the British economy and would reduce gross domestic product by four percent compared to remaining in the EU.
>> Also read here: Johnson wants to protect British steel manufacturers – conflict with WTO looms
Behind this gloomy forecast lies a tangible problem for Prime Minister Boris Johnson. Not only is Britain poorer by 100 billion pounds a year as a result of Brexit, but the British tax authorities are also losing around 40 billion pounds in tax revenue. Money that Johnson, who is fighting for his political survival, could use now. The new Chancellor of the Exchequer, Nadhim Zahawi, now wants to reconsider raising the corporate tax rate from 19 to 25 percent.
“We know what to do, but we don’t do it,” says Paul Johnson, director of the Institute for Fiscal Studies. His recipe for change: early education, free trade, a competition policy for the digital age and a stability-oriented economic policy.
More: One lie too many – Boris Johnson is about to end his political career