Brexit '˜would have huge impact and spark turmoil global markets'

The Organisation for Economic Co-operation and Development (OECD) slashed its forecasts for the UK economy as it said Brexit fears have already “undermined” growth.

It added that Brexit would have significant impact on growth across Europe and rest of the world and trigger turbulence in financial markets.

In its latest economic outlook forecast, it said: “A decision to exit would result in considerable additional volatility in financial markets and an extended period of uncertainty about future policy developments, with substantial negative consequences for the United Kingdom, the European Union and the rest of the world.”

The OECD cut its forecast for UK growth this year to 1.7%, down from 2.2% predicted in February.

But this assumes a vote to remain in the EU, and the OECD reiterated Brexit warnings for growth following a report in April which said it would cost British workers the equivalent of a month’s pay by the end of the decade.

The OECD estimated in April that by 2020 GDP would be more than 3% down on what it would have been if Britain had remained in the EU - the equivalent of £2,200 per household at today’s prices.

Under the OECD’s “central scenario”, by 2030 the loss of GDP would have risen to more than 5% - a loss of £3,200 per household.

The group’s latest gloomy assessment also underlines its fears over the global economy, which it said would fail to see growth pick up this year, remaining at 3%, and only edge up slightly in 2017 to 3.3%.

“Eight years after the financial crisis, the recovery remains disappointingly weak,” it said.

It added: “The forthcoming UK referendum on EU membership has already raised uncertainty, and an exit would depress growth in Europe and elsewhere substantially.”

In the UK, the OECD said referendum uncertainty “has led to a significant slowdown in economic activity”.

“Business investment has contracted as businesses have put their spending decisions on hold and hiring intentions have weakened.”