Carney BACKTRACKS on Brexit as BofE governor admits living standards will RISE

Posted on Feb 22 2018 - 3:56am by admin

The Governor of the Bank of England was part of former Chancellor George Osborne’s Project Fear campaign during the referendum and had continued to warn of a downturn in growth after voters backed Leave.

But speaking to the Treasury Select Committee, Mr Carney has at least recognised that living standards are set to go up.

He told MPs that for the first time since the 2008 financial crash under the last Labour Government he expected to see a “return to real income growth” this year.

This means that average earnings will outstrip inflation which in turn will bring an expected boost in economic activity. 

However, he added that “uncertainty” caused by not knowing the outcome to Brexit posed the biggest risk to economic growth.

Mr Carney has also kept his options open for an increase in interest rates in what could be a major boost for pensioners with investments but a problem for mortgage holders.

He said: “We don’t think that’s what’s necessary for the economy, and so the pacing of this is also accordingly slower.”

He added: “As we all know there will be some very big developments over the course of this year around our future of our relationship with the European Union which will have an impact on the expectations of households and businesses and therefore on the economic outlook.

“Monetary policy is nimble, it will react to those expectations. 

“There will also be other development that we can’t anticipate and of course we will – if they are persistent and affect the inflation outlook – we would react to those as well.”

However, Andrew Haldane, the Bank’s chief economist warned that the jobs boom in Britain is at risk if there is a delay in raising interest rates.

Mr Haldane said: “Historically the thing that has really killed jobs has been central banks stepping on the brakes too late. As Janet Yellen said, ‘recoveries don’t die of old age’.

“They die because central banks step on the brakes because they react too late.

“And we’re absolutely clear, we don’t want to be back there again because it’s bad news for jobs.

“And that means going in this limited and gradual way to head things off in advance to prevent having to step on the brakes, a handbrake turn… and that’s fundamentally at the root of our role as a central bank.”

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