Bank of England governor warns no-deal Brexit could cause recession – business live

UK central bank has warned that Britain faces weakest growth since the financial crisis, as it leaves borrowing costs unchanged

Source: The Guardian
The Bank of England in London.
The Bank of England in London. Photograph: Yui Mok/PA


Not for the faint-hearted….


Several experts are concerned that the BoE has slashed its 2019 growth forecast to a measly 1.2%.

John McDonnell MP, Labour’s Shadow Chancellor, says it shows the risk of leaving the EU without a deal:

“The Bank of England downgrading it’s 2019 growth forecast shows that people are increasingly worried about this Government’s stewardship of the economy.

“The Government must be stronger in averting a no-deal Brexit, and act now to protect the economy.”

Rain Newton-Smith, CBI chief economist, fears the economy is already “seizing up” from uncertainty:

The Bank’s forecasts, when put together with recent business surveys, illustrate the harmful impact on the economy the longer that this goes on.

Brexit uncertainty has kept interest rates on hold this month, and the near-term outlook for the UK economy is also weaker. However, in the event of a smooth Brexit, the Bank expect a lift to economic growth and business investment further ahead, as greater clarity unlocks pent-up demand.”

James Smith, research director at the Resolution Foundation, has warned that such weak growth would hurt living standards across the UK.

“The Bank has today put a major health warning on the UK economy as ongoing Brexit uncertainty and weaker global growth combine. Such a slowdown, should it materialise, is not just about abstract GDP figures but slower earnings and income growth for households all over the country.

“Today’s report should remind politicians across parliament that the stalemated Brexit process comes with a very real price tag. Everyone should be focused on the action that sits within the hands of UK policy makers to deliver stronger growth than the frankly awful forecasts published today by the Bank.


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Today’s Bank of England press conference in London
Today’s Bank of England press conference in London Photograph: Andy Rain/EPA


Summary: Bank of England fights fog of Brexit

The broad message from Mark Carney today is that growth has weakened since the last Inflation Report three months ago, Brexit fog is clouding the economy, and the risk of a no-deal Brexit has intensified.

On growth, the BoE now expects UK GDP to only rise by 1.2% this year, down from 1.7%. That would be the weakest growth since 2009, when Britain was reeling from the financial crisis.

Most of the damage will be done in the first half of 2019. If Britain secures a soft Brexit, growth could then pick up – perhaps faster than the Bank expects.

Governor Carney warned:

The fog of Brexit is causing short term volatility in the economic data, and more fundamentally, it is creating a series of tensions in the economy, tensions for business.”

On the upside, the economy still looks to be in OK shape:

The fundamentals of the UK economy are sound. The financial sector is resilient. Corporate balance sheets are strong, and the labour market is tight.”

But the downside is that leaving the EU without a deal would hurt the economy – and Mark Carney believes it’s more likely than before. He warned that a No-Deal would raise the chances of “negative quarters” of growth. Two or more negative quarters would be a recession.

He also warned that half of UK firms simply aren’t ready for a no-deal Brexit, saying:

“Although many companies are stepping up their contingency planning, the economy as a whole is still not yet prepared for a no-deal, no transition exit.

In terms of our agent surveys, most recent surveys, of businesses and their preparedness, half of them say they are not ready. And the half that say they are ready… ready means ‘we’ve done all we can’.

BBC Politics (@BBCPolitics)

Economy as a whole is “not yet prepared” for a no-deal #Brexit – Mark Carney gives details of current UK economic uncertainty

February 7, 2019

Carney also criticised European Council chief Donald Tusk, over his claim that a “special place in hell” awaits the leaders of the Brexit campaign. Carney said he was “surprised” by the comments (which have created quite a biblical storm in the UK), and quoted from the Gospel of Matthew:

If one wants to be theological, “Do not judge because you too will be judged.”

And asked whether he woke up every morning, regretting extending his tenure as BoE governor to help with Brexit, Carney ruefully revealed that the crisis has been interfering with his beauty sleep:

“I don’t wake up in the morning any more….I wake up in the middle of the night.

“No, the reason I extended was to remain here during a period that could be slightly more volatile or could involve a slightly more difficult transition …, so obviously I don’t regret it all.”

[Thanks to Thomson Reuters for the quotes]



I think we can all sympathise with Mark Carney’s disrupted sleep….

Cam Simpson (@CamSimpsonNews)

Asked at a presser if he wakes up each morning regretting that he’s the @bankofengland governor in the age of Brexit, @markcarney1 replies: “I don’t wake up in the morning any more … I wake up in the middle of the night.” @Brexit

February 7, 2019


Q: Isn’t there a danger that Brexit uncertainty will persist for longer than you expect, hurting the economy, especially as you think it will take four years to agree a UK-EU trade deal?

Some uncertainty will linger around, yes, Mark Carney replies. But it would be “substantially less” if the UK leaves with a withdrawal agreement.

That’s the end of the press conference. Reaction to follow…..


Q: Have you considered copying the Federal Reserve, and holding press conference more frequently?

Carney says the Bank has already been making changes to communicate better with households. And as Brexit is such a big issue, the people responsible with handling Brexit should be the ones front and centre right now.


Ben Chu (@BenChu_)

Carney asked if he ever wakes up in the morning and wishes he’d left the BoE in 2018 as originally planned. Jokes: “I don’t wake up in the morning any more – I wake up in the middle of the night!”

February 7, 2019


Q: Are you worried about disruption at Barclays, where activity investor Ed Bramson is trying to shake up the bank and get a seat on the board.

Carney says its important to maintain responsible banking and safe lending standards, and they won’t be compromised for anyone.


Mark Carney
Photograph: Bank of England


Q: When you arrived as governor, you intended to leave by last summer. We’re all absolutely delighted that you stayed on longer, but do you ever wake up in the morning and wish you’d stuck to plan A, asks my colleague Larry Elliott mischievously.

Fighting off a fit of the giggles, Carney replies that he doesn’t wake up in the morning any more, he wakes up in the middle of the night.

But obviously he doesn’t regret agreeing to extend his stint at the BoE, and it’s a privilege to do the job, he replies sincerely (I think!).


The rebalancing of the UK economy has paused, Carney warns. Consumption is providing the bulk of the growth again as business investment takes a Brexit hit.

First Squawk (@FirstSquawk)


February 7, 2019


Q: Back to Brexit.. is no-deal more likely, and do you think the departure date could be extended?

Yes, Mark Carney replies, the probability of a no-deal Brexit has gone up. There are seven weeks until the Brexit data, and there still are a lot of possibilities.

He says some senior cabinet ministers have speculated about delaying Brexit beyond 29 March, and that some parliamentary experts have speculated that there isn’t enough time to get all the legislation through.

But Carney adds that Theresa May has been adamant that the UK will leave the EU on 29 March.

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