OECD Considers BREXIT to Have an Adverse Economic Effect on Both the UK and EU

On April 27, 2016, the OECD published a report analyzing the economic consequences of the United Kingdom exiting the European Union. According to the OECD Policy Paper, the outcome of the referendum to be held on 23 June "would be a major negative shock to the UK economy, with economic fallout in the rest of the OECD, particularly other European countries." The OECD compares the BREXIT to a tax on GDP that would cause a rising cost to the economy that would not get incurred otherwise. In the case of a formal exit, by 2020, the UK economy would drop its GDP by 3%. According to the OECD report, that would be equivalent to a yearly cost per household of USD 3200 (GBP 2200). Long term prospects by the OECD report expect a 5% drop in GDP by 2030, equivalent to USD 4650 (GBP 3200) loss per household.

[In the longer term] "structural impacts would take hold through the channels of capital, immigration and lower technical progress."

Source "The Economic Consequences of Brexit: A Taxing Decision."

According to the OECD, not only the UK but also other European economies would also hold back GDP in a BREXIT scenario and result in "heightened uncertainty" about the future of Europe. The OECD report points out to the fact that the UK economy prosperity had a significant contribution from the EU membership. In the last 42 years of European membership, the UK more than doubled the GDP per capita.

"Since 1973, when the UK joined the EU, UK GDP per capita doubled, increasing more than in other non-EU English speaking countries over the same period, including in the United States."

Source "The Economic Consequences of Brexit: A Taxing Decision."