Brexit has cost UK households £900 each – “which is a lot of money,” says Bank of England governor Mark Carney
Households are £900 worse off since the Brexit vote, Bank of England governor Mark Carney has claimed.
Despite global and European economies being “much, much stronger” than they were when the Bank made its economic predictions ahead of the 2016 referendum, and a “very large stimulus provided by the Bank of England”, the UK’s economy is “up to two per cent lower than it would have been”, he said this morning, adding: “That is a reasonable difference.”
“If you map that into household incomes… Real household incomes are about £900 lower than we forecast in May 2016, which is a lot of money,” he added.
Speaking in front of the Treasury Select Committee, Carney admitted he could not say this was entirely the fault of Brexit, but noted that investment spending was weak despite “all the positives” that businesses were operating within, such as clean balance sheets and healthy financial conditions both domestically and overseas.
Carney said investment spending was three or four percentage points lower than expectations but struck a note of optimism, saying the Bank now expected that to increase, which was “key to our forecasts”. But it would not be a sharp increase, he added.
“Over the last year and half there has been an impact, relative to what we would have expected,” Carney said.
“It’s understandable why businesses are holding back – there are big decisions about to be made, why wouldn’t they wait a little while longer until path is clear?”
Deputy governor Dave Ramsden went on to confirm his boss’ estimate, saying the “weaker nominal wages and higher prices gives you a hit to real wages or real household incomes that translates into these figures”, but put the estimate at as high as £1,000.