UK jobs, trade at risk under no-deal Brexit, says OECD

Britain faced risks to trade and jobs if it did not reach a post-Brexit deal with the European Union by the end of 2020, the Organisation for Economic Co-operation and Development said.

Risks around the future relationship with the EU compounded Covid-19-related uncertainty, “including whether a free trade agreement can be negotiated before the end of 2020”, the OECD said on Wednesday.

“The failure to conclude a trade deal with the European Union by the end of 2020 or put in place alternative arrangements would have a strongly negative effect on trade and jobs,” it warned.

“If the United Kingdom moves to a basic free trade agreement with the European Union at the end of 2020, as assumed in the projections, trade costs will increase and exports will fall in 2021.”

It added that the UK should make a temporary arrangement to stay in the EU Single Market beyond the transition period deadline of December 30, 2020 "given the pressures firms already face from Covid-19".

The OECD said the government should also consider temporarily postponing future increases in the National Living Wage to support labour demand and facilitate the reallocation of labour towards sectors that may face job shortages.

"Further ahead, the Covid-19 crisis will lead to permanent structural shifts in the economy and policy should support a more sustainable and inclusive re-adjustment," the OECD added.

"This could entail adjusting plans for public investment in line with digital, sustainable and inclusive growth targets, for example by increasing carbon taxation, reducing the tax wedge between self-employed and regular employees, and shifting funds within the National Productivity Investment Funds towards digital infrastructure."