The UK government’s planned two-year period to implement changes after it leaves the European Union is not long enough, according to Angel Gurria, secretary-general of the Organisation for Economic Co-operation and Development (OECD).
He told the Confederation of British Industry (CBI) annual conference in London today:
The transition period should be more than two years, it should be as long as it takes for businesses to adapt. The UK government must give the transition phase the time it needs. It took 40 years to put the union together so it shouldn’t take only two years to leave it.
The economic impact of Brexit has already hit UK growth and households across the country hard, according to Gurria.
GDP figures published in September saw the UK drop from the top to the bottom of the list of G7 economies when it comes to economic growth in the year since the Brexit vote.
Instead of expanding 1.7 percent in the year to the second quarter of 2017, the Office for National Statistics (ONS) said that the UK growth rate had declined to 1.5 percent.
Focus on skills and productivity
The muted ONS figures are in part caused by the fall in sterling since the UK vote to leave the EU, which has pushed up inflation, making the country’s skills shortage a more serious problem, Gurria told CBI conference attendees.
Without a qualified domestic talent pool, UK productivity has been unable to keep up with other countries in Europe and beyond, he said:
Over a quarter of UK workers have low skills and thus labor productivity is stalling in the country. It takes a German, Dutch, Danish, French or American worker four days or less to produce what the average worker in the UK makes in five days.
Gurria also pointed to a regional divide within the UK when it comes to productivity:
The productivity divide can be almost double when you compare south east England and the rest of the country.
The dark side of globalisation
The productivity divide is just one example of how the benefits of globalisation have not been shared equally, according to Gurria.
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Across OECD countries, the “average income of the richest ten percent is ten times that of poorest ten percent,” he said.
Concentration of wealth erodes trust in governments, markets and modern capitaism. So we need to reverse these trends and create a more inclusive globalisation.