The accompanying charts indicate that consumer spending and investment growth in the UK have slowed sharply since 2016, reflecting Brexit uncertainties, the weaker pound, and a decline in households’ purchasing power.

This has translated into weaker housing and a slowdown in housing inflation. Export growth decelerated last year, and the current account deficit was at 3.2% of GDP in the third quarter of 2018.

The OECD projections also presented here assume a soft landing for the UK economy as it faces its Brexit deadlines. A soft landing is a very chancy projection, but it could be realized.

Even though UK economic growth slowed sharply last year, growth is expected to increase slightly in 2019 before slowing in 2020.

An expansionary fiscal stance combined with a slow recovery in exports are expected to support growth, while the monetary stimulus will be gradually withdrawn.

Inflation continues to be a non-policy issue, though the inflation pace is projected to converge to 2% by the end of 2020.

The economic stimulus introduced last year is expected to be gradually withdrawn. The OECD expects large uncertainties to remain and the fiscal stimulus to peak this year.

Nonetheless, the British authorities indicate that they will stand ready to respond with further stimulus if demand weakens significantly as a result of Brexit.