8.45am EST 08:45 I think we can all sympathise with Mark Carney’s disrupted sleep…. Cam Simpson (@CamSimpsonNews) Asked at a presser if he wakes up each morning regretting that he’s the @bankofengland governor in the age of Brexit, @markcarney1 replies: “I don’t wake up in the morning any more … I wake up in the
I think we can all sympathise with Mark Carney’s disrupted sleep….
Q: Isn’t there a danger that Brexit uncertainty will persist for longer than you expect, hurting the economy, especially as you think it will take four years to agree a UK-EU trade deal?
Some uncertainty will linger around, yes, Mark Carney replies. But it would be “substantially less” if the UK leaves with a withdrawal agreement.
That’s the end of the press conference. Reaction to follow…..
Q: Have you considered copying the Federal Reserve, and holding press conference more frequently?
Carney says the Bank has already been making changes to communicate better with households. And as Brexit is such a big issue, the people responsible with handling Brexit should be the ones front and centre right now.
Q: Are you worried about disruption at Barclays, where activity investor Ed Bramson is trying to shake up the bank and get a seat on the board.
Carney says its important to maintain responsible banking and safe lending standards, and they won’t be compromised for anyone.
Q: When you arrived as governor, you intended to leave by last summer. We’re all absolutely delighted that you stayed on longer, but do you ever wake up in the morning and wish you’d stuck to plan A, asks my colleague Larry Elliott mischievously.
Fighting off a fit of the giggles, Carney replies that he doesn’t wake up in the morning any more, he wakes up in the middle of the night.
But obviously he doesn’t regret agreeing to extend his stint at the BoE, and it’s a privilege to do the job, he replies sincerely (I think!).
The rebalancing of the UK economy has paused, Carney warns. Consumption is providing the bulk of the growth again as business investment takes a Brexit hit.
Q: Back to Brexit.. is no-deal more likely, and do you think the departure date could be extended?
Yes, Mark Carney replies, the probability of a no-deal Brexit has gone up. There are seven weeks until the Brexit data, and there still are a lot of possibilities.
He says some senior cabinet ministers have speculated about delaying Brexit beyond 29 March, and that some parliamentary experts have speculated that there isn’t enough time to get all the legislation through.
But Carney adds that Theresa May has been adamant that the UK will leave the EU on 29 March.
Q: Your new forecasts only project one interest rate hike over the forecast horizon. So, given the weak growth outlook, should we prepare for an interest rate cut?
No, Mark Carney insists. The message is that people shouldn’t expect a sharp move in interest rates.
Q: You’ve just delivered the worst growth forecasts in a decade – how is that manifesting itself, and how would a no-deal Brexit make it worse?
Governor Carney reiterates that the Bank’s central view is that in a form of soft Brexit, the economy will pick up, firms will hire and invest, wages will rise, inflation will rise too, and “we’ll move forwards”.
That’s the core expectation, and monetary policy is set accordingly. But at present, the economy has slowed – partly due to a weaker world, and a weaker Europe, but also due to Brexit uncertainty.
Q: What’s your message to the MPs who say we can leave the EU, painlessly, without a deal?
Arms crossed firmly, governor Carney points out that half of the UK businesses say they’re not ready for a no-deal Brexit (see here).
And for others, being ready simply means they’ve done all they can.
Mark Carney is asked whether he sympathises with Donald Tusk’s claim that there is a “special place in hell” for Brexit campaigners who didn’t draw up a plan for Britain’s exit from the EU.
No, the governor replies. “I was surprised by those comments yesterday”.
And showing a theological bent, Carney adds:
Do not judge because you too will be judged.
We do not know what the Brexit outcome will be, Mark Carney insists, adding that there are almost as many possible outcomes as on the morning after the EU referendum.
Q: Did you expect the Brexit negotiations to turn out this way?
Carney explains that the Bank saw a no-deal Brexit as a low-risk probability, but it has prepared for it in case it happened. That’s why the core of the financial system is ready for whatever happens.
Carney: No-deal Brexit would raise risk of recession
Q: Your forecasts show a one in four chance of a recession before the summer – would a no-deal Brexit affect that?
Mark Carney says households and businesses are “increasingly” taking notice of Brexit uncertainty, and that is affecting the economy.
That, and the weaker global growth, is why the Bank has cut its growth forecasts (from 1.7% to just 1.2% in 2019).
When the economy is growing more slowly, the chances of a negative quarter or two goes up, the governor explains.
So if there is a shock…. such as a no-deal, no-transition Brexit, that further increases the risk of quarters of negative growth, he adds.