Bank of England governor Mark Carney forecasts "conscious recoupling" of the UK with global economy growth

 
Rebecca Smith
Carney said predictions regarding a drop in the pound and the economy slowing had proved correct
Carney said predictions regarding a drop in the pound and the economy slowing had proved correct (Source: Getty)

Bank of England governor Mark Carney has expressed hopes of a "conscious recoupling" between the UK and the global economy - while he expects the Brexit effect to be "short-term".

Speaking on BBC Radio 4's Today programme, Carney noted the International Monetary Fund's forecast for higher growth among advanced economies in 2019 than expected, but downgraded the UK.

"We at the Bank of England see some potential for a bit of a pick-up. But what's happening in the UK is effectively the Brexit effect in the short-term, and I would underscore 'in the short-term'," he said.

Carney added that the UK economy at the end of the year is expected to be around two percentage points below what had been expected ahead of the referendum.

While the world economy is accelerating and the BoE hasn't seen that yet, Carney said:

There's the prospect this year, as there's greater clarity about the relationship with Europe, and subsequently with the rest of the world, for a recoupling, if I can use that term, borrow it from Gwyneth Paltrow, so a conscious recoupling of the economy - the UK economy - with the global economy.

Read more: Financial services best placed to weather no-deal Brexit storm

Paltrow coined the term "conscious uncoupling" in 2014 to refer to her separation with Chris Martin.

Carney said the Brexit effect was short-term, with firms in the UK, "whether they're in financial services, whether they're in agriculture", waiting to see what kind of relationship Britain will have with the EU, and what kind of relationships it will have with the rest of the world.

The BoE governor said more light will be shed in the former in the coming months.

Earlier this week, the IMF said prospects for the global economy had brightened, though the UK was given a small downgrade.

Carney acknowledged today that the UK economy was being affected by "tens of billions of pounds" lower economic activity, and the question was then how to make that up by growing above potential

While businesses have strong balance sheets, credit is freely available, and the UK is "virtually at full employment", investment had not picked up anywhere near to the extent as it has internationally, Carney added.

Read more: Carney spreads Christmas cheer with Brexit assurances for EU banks

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