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Carney Says U.K. Slowdown Underscores Need for Brexit Certainty

Carney Says U.K. Slowdown Underscores Need for Brexit Certainty

Carney Says Uncertainty Remains Elevated Amid `Fog of Brexit'

The U.K.’s slower-than-expected growth in the final quarter of 2018 underscores the need for certainty on Brexit, according to Bank of England Governor Mark Carney.

Figures earlier this week showed the U.K. economy grew just 0.2 percent in the three months through December, rounding off the weakest year for expansion since 2012. The slowdown was worse than economists had forecast and below the rate predicted by the BOE.

“What those figures show is that there is a need for certainty,” Carney said following a speech in London Tuesday. “It underscores the importance of a transition to whatever end-state Parliament decides.”

The U.K. is currently set to leave the European Union -- with or without an exit deal -- on March 29, and Prime Minister Theresa May has yet to find an exit agreement that is acceptable to both Parliament and the bloc. Carney said it’s “in the interests of everyone, arguably everywhere” that a “Brexit solution that works for all is found in the weeks ahead.”

“There is a very high level of uncertainty of the degree of access companies are going to have in the next two months, which is quite an extraordinary situation to be in,” he said. “Quite logically, rationally, understandably, they are holding back on making bigger investment decisions. Those who have contingency plans are putting them in place” he said, adding “but not all companies can self-insure against this possibility.”

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In their quarterly Inflation Report last week BOE policy makers cut their forecast for growth this year to the weakest in a decade and predicted a dramatic investment slump. The governor said the economy was suffering under the “fog of Brexit.”

The growth report “certainly doesn’t suggest the economy has more momentum than we expected,” Carney said Tuesday, “But directionally, the figures and the composition are broadly consistent” with the bank’s forecasts.