UK economy will slow less than expected after Brexit vote, says Bank of England's Michael Saunders

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Michael Saunders is an external member of the Monetary Policy Committee (Source: Getty)

A member of the Bank of England’s Monetary Policy Committee (MPC) believes the UK economy is likely to slow less than most economists are expecting after June’s Brexit vote.

Michael Saunders, a new external member of the MPC, said: “There’s plenty of evidence from groups like the Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF) that EU exit probably is a modest negative for the UK economy over a long period of time.

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“But in the near-term, the next year or two, I think the economy will slow, but perhaps not slow as much as the consensus has been expecting.”

In an interview with the Financial Times, he added: “This is partly because of the support from loose financial conditions, partly because of the underlying advantages, including supply-side flexibility of the UK economy.”

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Saunders also said he would consider cutting interest rates – which he voted to keep unchanged at 0.25 per cent last week – if unemployment rises.

He said: “If the jobless rate were to rise, increasing labour market slack further, then that would be an argument in favour of lower interest rates.”