Belfast Telegraph

Brexit uncertainty is hurting UK economy, warns Carney

By Holly Williams

The governor of the Bank of England warned that the economy would remain "sluggish" as he said Brexit was hitting households and businesses.

Mark Carney said mounting uncertainty over the UK's future relationship with the EU was holding back business investment and consumer spending as the Bank cut its growth forecasts for this year and next.

The Bank kept rates on hold at 0.25% as Britons suffered amid a tightening squeeze on incomes from soaring prices.

Mr Carney said Brexit uncertainty "weighs on the decisions of businesses and households and holds down both demand and supply".

He cautioned that the pressure on families would continue for the next few quarters, with Britain in the "teeth" of an income squeeze and real wages at their weakest since the middle of the 19th century. But he said wages would start to outpace inflation next year, while growth will also begin to pick up.

The central bank boss said rates were likely to begin to rise as the economic outlook improves. He said: "Growth remains sluggish in the near term as the squeeze on households' real incomes continues to weigh on consumption."

But he added: "Even a limited pick-up in growth is likely to have consequences for the stance of monetary policy."

Mr Carney said the Bank believes households and the wider economy could withstand a rate hike, "if appropriate". Financial markets are pencilling in two rate rises over the next few years.

Belfast Telegraph