Wednesday 23 November 2016 10:29 am

Uncertainty not totally to blame for UK's economic problems, says MPC member

Uncertainty might be causing some wobbles for businesses, but it gets more blame than it deserves, a member of the Bank of England's monetary policy committee (MPC) will say this morning.

Speaking at a conference hosted by JP Morgan Cazenove, Kristin Forbes, external MPC member, is expected to say that, while mentions of uncertainty in the likes of company statements and even MPC meeting minutes have risen sharply since Brexit, measuring both what uncertainty actually is and the impact it is having remains incredibly difficult.

"There is much uncertainty about uncertainty," she will say.

Read more: Looming dangers demand an urgent rethink of monetary policy in Britain

Forbes is also expected to add that, despite feelings of uncertainty, the UK has battled it out this time around relatively well.

"The strength of the UK economy during the period of heightened uncertainty before and after the referendum on EU membership suggests that uncertainty is dragging less on growth than has traditionally occurred," she is expected to say. 

Read more: Should the chancellor prioritise deficit reduction in his Autumn Statement?

However, Forbes will continue:

Even though heightened uncertainty has recently appeared to have less effect on the UK economy than expected, that does not mean that it has had no effect, or will have no effect in the future… Heightened uncertainty could have a larger or smaller impact over time if it continues for a prolonged period. And UK uncertainty measures could quickly shift – up or down – as more details on the future arrangement between the UK and EU are clarified.

The Bank of England unleashed a variety of measures to stimulate the economy over the summer. However, Forbes did not vote in favour of extending quantitative easing, and she was also opposed the Bank's plan to buy corporate bonds.

Meanwhile, in September, the Bank of England's financial policy committee published a report highlighting a string of risks the UK economy was now faced with as a result of the vote to leave the EU.