The “Brexit effect” is restricting business investment in the economy, the Governor of the Bank of England has said.
Mark Carney said on Sunday that while the economy was “growing” it really should be “booming”.
“Brexit uncertainty is reinforcing something that started in 2008. We actually think that productivity is going to pick up over the course of the next couple of years but not to the same degree as in the past and it is that Brexit effect,” he told ITV’s Peston on Sunday programme.
Carney said businesses were “waiting to see the nature of the deal with the European Union” that the Theresa May ended up striking.
“Since the Referendum what we have seen is that business investment has picked up but it has hasn’t picked up to any of the extent one would have expected given how strong the world, is how easy financial conditions are, how high profitability is and how little spare capacity they have so it should really be booming and it is just growing,” he said.
Carney’s comments came ahead of the next round of Brexit talks which are due to start this week.
On Monday, the head of the CBI will attack the negotiations as currently resembling “a prime-time soap opera”.
Paul Drechsler will tell the meeting of business leaders there needs to be a “a single, clear strategy” for Brexit.
“Brexit is only 508 days away. But for many businesses, their alarm clocks are set even earlier than that. They’re set to the moment they will actually enact their contingency plans,” he will say.
“For 10% of business the alarm has already rung, and they’ve begun moving staff or slowing recruitment. Without a transitional deal, when EU leaders gather in Brussels for the March summit, a total of 60% of businesses will have done the same2. The clock is ticking.”
Drechsler will add: “At the moment, I’m reminded of a prime-time soap opera, with a different episode each week. First Lancaster House, then article 50, the European Council, two dinners with Juncker – and no doubt many exciting instalments to follow.”