• The UK's future relationship with the European Union (EU) remains undecided even though the Article 50 exit date is less than two months away. Brexit uncertainty has intensified since our last forecast and is now evident in various indicators.

• Our main forecast is conditional on a ‘soft’ Brexit scenario. Under this scenario, GDP growth stabilises at around 1.5 per cent this year before recovering to 1.7 per cent in 2020. CPI inflation eases to the target level of 2 per cent over this period.

• We expect the Bank of England to raise Bank Rate by 25 basis points in August. We also expect the Chancellor to spend more than the latest OBR forecast. That, together with the reclassification of student loans in public deficit data, will mean that the Chancellor is set to breach the fiscal mandate.

• There is a chance that the UK exits the EU without a deal at the end of March. Policymakers will have more room to inject stimulus if inflation expectations remain anchored.

• Recent data suggests that the global growth cycle has probably peaked. We forecast world GDP growth of around 3.5 per cent a year over the next two years.

• On that basis, the second decade of the 21st century will have seen sustained global GDP growth.

• Tariff increases and trade disputes seem likely to act as a drag on the global economic outlook, with a bias towards slower growth as a consequence.

• Despite faster wage growth in advanced economies, the recent fall in oil prices has reduced the risks of inflation overshooting targets. We expect central banks to reduce monetary accommodation very gradually.

Unanimity on the question of UK exit from the EU is not within reach, but this does not mean that the House of Commons or the population at large can not find a way out of the current Brexit impasse that is fair and legitimate. We discuss different voting procedures which satisfy some important principles of democracy and which can select the option that can win a majority against all other alternatives in a head-to-head majority vote. We argue that strategic considerations play an important role and we propose a procedure that works well and can help break the impasse when voters act strategically. The procedure requires (1) that all options with some minimum support are on the agenda, (2) that voting takes place in multiple rounds and (3) that in each round the alternative with the least support is eliminated until in the last round only two alternatives are left and the majority winner is selected. We discuss how this procedure can be modified to take into account that some voters may vote non-strategically and how it, in practice, could be used either in the House of Commons or in a new referendum.

I summarise new facts on hours worked differences across countries and their driving forces. The facts are derived from a comprehensive analysis of micro data sets. First, hours worked are substantially higher in poor than in rich countries. Second, lower hours worked in Europe than in the US can partly be explained by differences in vacation weeks and partly by differences in the demographic structure. Moreover, employment rates tend to be higher and weekly hours worked lower in Western Europe and Scandinavia than in the US, with the opposite being true in Eastern and Southern Europe. Last, among core-aged individuals, married women form the group that exhibits the largest differences in hours worked across countries. International differences in taxation, and especially in the tax treatment of married couples, are an important driver of these differences.

On average, UK productivity performance in the decades leading up to the financial crisis was quite disappointing. Joining the EU was not to blame. Indeed, EU membership, which was an integral part of the Thatcher reform programme, had a significant positive impact. Over the long run, UK supply-side policies have been badly designed in various different ways. These design faults have not been the result of constraints imposed by EU membership but rather the consequence of domestic government failure. There is no reason to think that EU exit will lead, either directly or indirectly, to improvements in UK productivity outcomes.

This paper uses plant-level estimates of total factor productivity covering 40 years to examine what role, if any, productivity has played in the decline of output share and employment in British manufacturing. The results show that TFP growth in British manufacturing was negative between 1973 and 1982, marginally positive between 1982 and 1994 and strongly positive between 1994 and 2012. Poor TFP performance therefore does not appear to be the main cause of the decline of UK manufacturing. Productivity growth decompositions show that, in the latter period, the largest contributions to TFP growth come from foreign-owned plants, industries that are heavily involved in trade, and industries with high levels of intangible assets.

This paper builds upon Bartelsman, Lopez-Garcia, and Presidente (2018) and provides empirical evidence on the cyclical features of labour reallocation in a sample of European Union (EU) countries over the Great Recession and the slow recovery. The analysis makes use of cross-country micro-aggregated data on firm dynamics and productivity from release 6 of the ECB CompNet database. While productivity-enhancing reallocation generally is counter-cyclical, with a stronger effect providing a silver lining in downturns, it was weaker during the Great Recession in the EU, but reverted back to more normal patters in the most recent years.

The UK's recent productivity performance has been strikingly weak. Output per hour worked, which increased by around 2.1 per cent per year in the decade leading up to the economic downturn, increased by just 0.2 per cent per year in the ten years following the global financial crisis. This paper presents three ‘stylised facts’ on the UK's recent productivity performance through the lens of official statistics: the weakness of recent productivity growth; the ‘gap’ in productivity terms between the UK and other leading economies; and the large differences in productivity between businesses. It surveys recent work by ONS to help researchers and policy-makers to understand the UK's productivity performance, including new experimental and official statistics, analysis and research. It concludes by drawing together the key findings of these new statistics, highlighting how further improvements might be made through the greater use of survey and administrative data.