BoE's Carney Says Longterm Prospects For U.K. 'Positive'
28 September 2016 - 5:44AM
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The U.K. economy is currently experiencing a period of
uncertainty and adjustment following the Britons' surprise vote in
June to leave the European Union, but the longer term prospects are
positive, Bank of England Governor Mark Carney said in an interview
published Wednesday.
"As all of the MPC said in our most recent decision in
September, the broad contours of how the economy is performing
[are] in line with what we had expected in August," Carney said in
the interview to the Herald Scotland newspaper.
"We had expected in August that the economy would slow
materially during the second half of this year, relative to
relatively strong growth in the first half of this year. Broad
brush, that is what we are seeing."
In the September policy session, a majority of BoE policymakers
signaled that they would support a further cut in the key interest
rate in November, if the economy evolved in line with the
projections made in August.
Pointing out the softening in business investment and the real
estate market, Carney said such "big lumpy decisions" were being
affected by the "Brexit" uncertainty. Meanwhile, consumer spending
is holding up and the housing market is giving mixed signals, he
added.
"There are positive long-term prospects for the UK economy,"
Carney told the Scottish daily.
"It is a product of a period of uncertainty and adjustment that
naturally is under way. It is a slowing from strong growth to
something less than that."
In a bid to cushion any adverse impact from "Brexit", BoE
policymakers had lowered the key rate by a quarter-point in August,
which was the first cut in more than seven years. The bank also
boosted its asset purchase programme by GBP 60 billion.
Scotland had largely voted to 'remain' in the EU in the June 23
referendum. The "Brexit" vote has triggered calls for a second
Scottish independence referendum.
Regarding the economic impact of the heightened constitutional
debate in Scotland in the aftermath of the "Brexit" vote, Carney
said, "At this stage, there is a common issue across the regions,
across home nations, across sectors of the economy, where
individuals and businesses are coming to terms with the potential
changing nature of the relationship with Europe and the changes and
challenges that brings."
"That is the principal uncertainty people are addressing. It is
still early days in that adjustment," he added.
Businesses are prudently examining their options in the light of
the potential future relationship between the U.K. and the EU, and
this is slowing the economy, Carney pointed out.
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