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Brexit ‘No Deal’ Will Slow UK Growth

Brexit ‘No Deal’ Will Slow UK GrowthBrexit ‘No Deal’ Will Slow UK Growth

A failure to agree new trading terms with Europe after Brexit will result in slower economic growth, the governor of the Bank of England has warned.

Mark Carney said the “no deal” scenario will slow growth in the UK economy in the short term, speaking on ITV’s Peston on Sunday show, MoneyControl reported.

 “In the short term, without question, if we have materially less access (to the EU’s single market) than we have now, this economy is going to need to reorient and during that period of time it will weigh on growth,” he said.

UK growth is being held back by Brexit uncertainty, while the global economy is booming, he said. “Since the referendum, what we have seen is that business investment has picked up, but it hasn’t picked up to the extent one would have expected given how strong the world is, how easy financial conditions are, how high profitability is and how little capacity they have,” he said.

“It should really be booming, and it’s just growing,” he added. He also said uncertainty would be resolved in the “relatively near future”.

The central bank increased rates for the first time in a decade on Thursday.

You can look at it two ways. After ten years of inertia, bank rate has doubled. Or: after 10 years of inertia, bank rate has been raised by one quarter of one percent, to half of one percent. Big deal!

Of course, for most businesses and individuals, the official rate is meaningless. It is the rate to which everything else is geared, but everything else is usually a lot higher than 0.25% or 0.5%.

 

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