Interest rates could fall as the economy suffers 'post-traumatic stress' of Brexit, says Mark Carney
The Governor of the Bank of England, Mark Carney, has said interest rates are likely to be cut this summer
The Governor of the Bank of England, Mark Carney, has said interest rates are likely to be cut this summer in response to the “economic post-traumatic stress disorder” caused by the decision to leave the EU.
The Bank of England has downgraded its growth forecast for 2017 from 2.3 per cent to 1.6 per cent in the wake of the referendum result.
Carney warned during the campaign that a Brexit vote could tip the UK’s economy into recession, and he said today his warnings were being vindicated.
“The Bank has identified the clouds on the horizon and can see that the wind has now changed direction,” he said in a speech from the Bank of England.
He added: “All this uncertainty has contributed to a form of economic post-traumatic stress disorder amongst households and businesses, as well as in financial markets.”
However, Carney stressed that the Bank of England is not powerless to respond and signalled that the Monetary Policy Committee could cut interest rates further from their record low level of 0.5 per cent.
“In my view, and I am not pre-judging the views of the other independent MPC members, the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer.”
Carney was attacked by Leave campaigners, among them Andrea Leadsom, who has since put herself forward as a candidate to be prime minister.
Leadsom in May said the forecasts were “incredibly dangerous”, adding: “As an ex-Goldman Sachs banker Carney knew exactly what he was doing.
“He has encouraged financial instability and I think that absolutely damages the reputation of the Bank.”
The Governor was asked whether, if Leadsom was chosen to lead the country or became chancellor, he would have to resign. “The exact opposite,” he replied.
“What we said in terms of the risks to the economic outlook, in terms of the risk to financial stability, does anyone in the room not think that those risks have begun to manifest?
“Does anyone in the country think that those risks have not begun to manifest? So we did our job; we identified the risk.”
He added: “It would be irresponsible for me or any of my other colleagues to walk away from those obligations.”
UKIP leader Nigel Farage, however, was unconvinced, tweeting “Mark Carney once again talking down Britain.”
In June parliament voted to replace Air Passenger Duty with a new Air Departure Tax, which is expected to be substantially lower
Prime Minister used her speech to revive plans contained in the Conservative manifesto to cap prices for 12 million consumers
Jeremy Corbyn mixed with the Scottish public on his permanent election campaign tour but left the nation with some mixed messages.
Food Processing, Marketing & Co-operation grants handed out to 13 businesses across Scotland