POLITICS
22/01/2018 11:51 GMT | Updated 22/01/2018 14:45 GMT

EU Growth Protecting The UK From Brexit Shock, Says Jim O'Neill

'World trade - just when everybody’s trying to write it off - has actually risen sharply.'

PA Archive/PA Images
Jim O'Neill has said he is "embarrassed" to admit his predictions about UK growth were wrong

Growth in EU and global trade will shield the UK economy from a Brexit shock, Tory peer Lord Jim O’Neill has said.

A sharp rise in global growth and a booming north of England could see the UK “easily” swerve grim forecasts made in the wake of the Leave vote, the ex-Treasury minister said.

Speaking to the BBC ahead of the World Economic Forum in Davos, Switzerland, he also sounded the alarm on hard Brexit and pondered how much better the UK would be doing had it not opted for divorce.

He said: “I’m guessing world GDP growth of at least 4%, so a good half percent higher than the consensus is currently saying - and signs of it actually accelerating.

“Virtually every major place I can think of, [with the] possible exception of us, are all sharing in it at the same time. World trade - just when everybody’s trying to write it off - has actually risen sharply.”

recent report by Cambridge Econometrics for the Mayor of London suggested that UK growth could be on average 3% lower by 2030 than it would have been if Britain remained within the EU’s single market and customs union.

“If that’s the worst that Brexit will deliver, then I wouldn’t worry about it,” O’Neill added. “Now, my own view is if we go for a really hard Brexit or a no-deal Brexit, we’ll probably suffer more than that 3%.

“But if it is only 3%, what’s going on with the rest of the world - helping us - and with productivity improving, that will easily dwarf a 3% hit over 13 years, easily.”

Asked if his optimistic forecasts showed that he had been too pessimistic about Brexit, the Remain supporter said: “I’m almost embarrassed to accept that it might sound like that. 

“Because of course in principle I share the views of many that Brexit is a really weird thing for the UK to impose on itself from an economic perspective.

“And maybe this [better global growth] means the country’s going to be able to cope with Brexit better than certainly somebody like me might have thought some time ago.

“But I would quickly add at the same time, I have felt for a good couple of years, as important as Brexit is, it isn’t the most important thing facing Britain’s future.”

Pharmaceuticals and car manufacturing still faced a threat from hard Brexit, he said. 

O’Neill, who is on the board of the Northern Powerhouse Partnership, said rebalancing the economy outside of the South East was also “crucial” and there were signs that was happening.

“I certainly wouldn’t have thought the UK economy would be as robust as it currently seems,” Lord O’Neill said. 

“That is because some parts of the country, led by the North West, are actually doing way better than people seem to realise or appreciate.

“As well as this crucial fact, the rest of the world is also doing way better than many people would have thought a year ago, so it makes it easier for the UK.

“If this turns out to be borne out with more and more data over the coming months then the Brexiteers are going to be like the cat with the cream. They’re like ‘there you go, told you so’, which of course is ridiculous.”