Belfast Telegraph

UK Website Of The Year

Bank of England's Professor Kristin Forbes warns that EU referendum fogging up the picture on Northern Ireland and UK economy

Exclusive by John Mulgrew

Published 20/05/2016

Professor Kristin Forbes
Professor Kristin Forbes

There remains a "fog" as to whether a softening in economic data in the UK and Northern Ireland is down to the looming Brexit vote, a Bank of England economist has said.

And Professor Kristin Forbes, an external member of the Bank's Monetary Policy Committee, is in Northern Ireland to find out whether firms here are putting off major decisions ahead of the EU vote on June 23.

She said Northern Ireland's situation is "somewhat different" to the rest of the UK, given its land border with the Republic.

But she said she believes the "effect of uncertainty now is weighing on businesses and weighing on investment".

"My take is, there is a fog over the data. Some of the data is quite solid, and some of the data has been a bit softer. We aren't quite sure why," she said.

"It could be related to uncertainty around the referendum. If I'm a company, and I know that in a month there will be a vote which might change my input costs, who I am selling to, it makes sense to delay having new workers, starting a new project or agreeing to a big salary increase until after that uncertainty.

"That could explain some of the softening. If that is the case, if there is a vote to remain, then that uncertainty is lifted quite quickly.

"We don't have concrete evidence that some of the softening we are seeing now is all referendum-related and uncertainty related, and there is a chance other things are going on."

The top US economist is in Northern Ireland, speaking to companies and gauging their opinion on the effect a Brexit could have on their business.

"The questions are somewhat different in Northern Ireland, given the tight connection with Ireland, a eurozone country, and that's what I'm trying to get a better sense of on this visit." She said it was particularly important to get opinions from businesses in Northern Ireland as it "is the one region that shares a border with Ireland - with a eurozone country. To really talk to companies to understand how they are thinking about the vote." But she says UK businesses could quickly return to investment and hiring once the EU vote is over, if the UK remains.

Bank of England governor Mark Carney has been vocal about the detrimental impact he believes a Brexit would have on the UK's economy.

Professor Forbes said while the Bank is forecasting inflation to hit 2% in two years, that will all depend on the strength of sterling, post-Brexit vote.

"It's very hard to predict, if there was an exit vote, what the outcome would be, because there is so much uncertainty, so it will be a decision for the government on how to modify trade agreements etc."

Belfast Telegraph

Your Comments

COMMENT RULES: Comments that are judged to be defamatory, abusive or in bad taste are not acceptable and contributors who consistently fall below certain criteria will be permanently blacklisted. The moderator will not enter into debate with individual contributors and the moderator’s decision is final. It is Belfast Telegraph policy to close comments on court cases, tribunals and active legal investigations. We may also close comments on articles which are being targeted for abuse. Problems with commenting? customercare@belfasttelegraph.co.uk

Read More

From Belfast Telegraph