Now Mark Carney sees a silver lining to Brexit
Mark Carney has said there may be a silver lining to Brexit for the UK economy.
Speaking to Reuters, the outgoing Bank of England governor said there are some potential upsides for the economy from Brexit, in marked contrast to some of his previous comments on the decision to leave the EU.
“In an environment where everything is getting a fresh look, it’s fertile ground for taking a step back and making bigger changes than otherwise might have been made,” he told Reuters.
Following his election win, Prime Minister Boris Johnson has signalled that he wants regions where growth is further behind London to “level up”.
This week Johnson gave the green light to HS2 which is likely to cost up to £100bn.
And Carney said such pronouncements suggest the government is seeking to bolster the UK economy outside of the EU.
“It’s early days but there are several initiatives – the Budget will be telling – that suggest that some of these opportunities are being grasped,” Carney said.
The new chancellor Rishi Sunak has just three weeks to complete the 11 March Budget after the shock resignation of Sajid Javid.
It is unclear whether the Treasury will keep Javid’s fiscal rules to allow an extra £22bn public sector net investment a year.
Following the referendum, Carney, who will leave the BoE after seven years next month, had warned that Britain’s economy was likely to suffer as a result of Brexit.
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Last year he warned that the UK would be hit by an “instantaneous” economic shockwave if Britain did not strike a deal with the EU.
He said that there would not only be disruption at Britain’s borders, but such a situation would render a “substantial number” of businesses “no longer economic”.
And the Bank warned last October: “In a disorderly Brexit, demand for UK assets could be expected to fall sharply, depreciating sterling and tightening financial conditions for UK households and businesses through adjustments in equity prices and corporate and bank funding costs.”
Despite these warnings Carney told Reuters Brexit could prove to be a “conceptual positive”.
“It is a major reordering of our relationship not just with the European Union but our trading relationships with the rest of the world and it is prompting a reassessment of economic policy, structural economic policy in the country,” he said.
Carney accepted the so-called Boris bounce which has seen increased business optimism, particularly in the property and construction sectors.
“We are already seeing a rebound in confidence, business confidence and to some extent a firming of consumer confidence,” the governor told Reuters.
Carney has accepted a post as the Prime Minister’s climate change adviser ahead of a UN climate change summit, COP26, in November.