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EU exit to be 'lengthy and bumpy', MPC member warns

By Kayleena Makortoff

Published 05/10/2016

UK economy could emerge unscathed, says Michael Saunders
UK economy could emerge unscathed, says Michael Saunders

The newest member of the Bank of England’s monetary policy committee (MPC) has used his first public speech to say that the Brexit process is likely to be “lengthy and bumpy”, but that the UK economy could emerge relatively unscathed.

Speaking at the Institute of Directors, external MPC member Michael Saunders said that compared with the Bank’s August inflation report, he saw more slack in the economy, but also greater prospect for growth.

“The process of EU exit may be lengthy and bumpy,” he said. “But, unless Brexit-related uncertainties rise sharply and/or global conditions disappoint markedly, I suspect that the UK economy will be not too bad in the year ahead, with growth in 2017 more likely to be clearly above 1% rather than (as the consensus expects) below 1%.”

Mr Saunders said he had not decided whether he would vote for extra stimulus at the MPC’s next meeting in November, saying “it will depend on the data”.

Policymakers have indicated that another rate cut is likely by the end of the year, to a little above zero, with economists expecting more measures in November when the Bank will have its next set of economic forecasts.

The MPC will not deliver a rate decision this month as part of a new schedule that will see it meet only eight times per year.

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