Bank of England governor Mark Carney: No Brexit deal will slow UK economic growth in the short term

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The central bank raised rates this week for the first time in a decade (Source: Getty)

A failure to agree new trading terms with Europe after Brexit will result in slower economic growth the governor of the Bank of England has warned.

Mark Carney said the "no deal" scenario will slow growth in the UK economy in the short term, speaking on ITV's Peston on Sunday show.

Read more: BoE deputy governor Ben Broadbent says more rate rises are on the way

“In the short term, without question, if we have materially less access (to the EU’s single market) than we have now, this economy is going to need to reorient and during that period of time it will weigh on growth," he said.

UK growth is being held back by Brexit uncertainty, while the global economy is booming, he said.

Read more: Bank of England raises interest rates for the first time in a decade

"Since the referendum, what we have seen is that business investment has picked up, but it hasn't picked up to the extent one would have expected given how strong the world is, how easy financial conditions are, how high profitability is and how little capacity they have," he said.

"It should really be booming, and it's just growing," he added. He also said uncertainty would be resolved in the "relatively near future".

The central bank increased rates for the first time in a decade on Thursday.