Brexit: UK economy has gone from top of G7 leaderboard to almost bottom, says Mark Carney
Mark Carney has said the Brexit vote has harmed the UK economy and pointed out that the country was the best performing in the G7 prior to the referendum but is now among the worst.
“We have not done as well in the short term as we would have done if the vote had gone the other way,” Mr Carney said on Thursday.
“We’ve gone from being the fastest growing economy in the G7 to one of the slowest.
The UK economy slipped to the bottom of the league of G7 leading economies in June but has since overtaken Japan after registering 0.4 per cent growth for the latest quarter.
That leaves the UK trailing Germany, France, Italy, the US and Canada. On the eve of the Brexit vote the UK economy was expanding faster than all of those nations.
“We will do whatever we can to support the economy during the transition - whether there is no deal or a comprehensive deal,” the Bank of England Governor said.
“We can provide support by keeping prices low and stable and by making sure banks can withstand whatever shock that might come whatever deal we have.
“People shouldn’t have to worry about inflation and financial stability. We’ll make sure inflation stays low and the banks stay strong.”
Earlier this month, the Bank’s Monetary Policy Committee hiked interest rates for the first time in more than a decade, lifting its benchmark rate from 0.25 per cent to 0.5 per cent.
Mr Carney’s comments come a day after his deputy, Ben Broadbent, said Brexit was likely to damage the UK’s productivity and could force a more rapid rise in interest rates.
In a speech on Wednesday, Mr Broadbent said that it was wrong to assume that the impact of leaving the European Union would negatively impact our national productivity (or output per hour worked) only gradually or in the longer term.
Instead, the former Goldman Sachs economist warned that the damage could be done relatively soon and might force a monetary policy response from the Bank to keep inflation under control.
“If EU withdrawal results in significant new barriers to trade between the UK and its major trading partners in the rest of Europe, one plausible consequence would be a marked shift in relative demand for UK output,” he said.
“A plant used to produce a particular car part, as part of an integrated European supply chain, cannot suddenly be converted into one that makes a complex German machine tool.
“A field currently producing barley, sold into the European market, can’t easily or as fruitfully be replanted with olive trees. Someone steeped in one particular area of financial services cannot overnight, or costlessly, be reborn as an expert widget-maker, able to generate the same contribution to GDP.”