The dual impact of Covid-19 and Brexit means that the UK faces deeper economic scarring than any other country, according to forecasts from the Organisation for Economic Co-operation and Development (OECD).
In its latest economic outlook, the OECD suggests that overall global growth will continue to accelerate as Covid-19 vaccines are rolled out and fiscal stimulus programmes are introduced. But although the UK’s GDP is forecast to rise by 7.2 per cent in 2021 – higher than most G20 countries – the OECD also predicts that the UK will suffer the deepest economic scarring, or long-term damage, of any G7 country.
The OECD measures losses in potential output due to Covid by comparing pre-pandemic projections for national income levels with forecasts for 2025. The UK could suffer the largest reduction in potential growth output of any G7 country, something partially attributable to Brexit-related disruption. By contrast, the US is the only economy forecast to be larger than expected before Covid-19, owing to the $1.9trn stimulus programme introduced by the Biden administration.
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