A senior official at Bank of England (BoE) has cautioned that another delay to Brexit could further disrupt business investment and damage the long-term economic outlook.
Ben Broadbent, a deputy governor at Britain’s central bank, said that a deferment beyond the new October 31 deadline would cause considerable impact on Britain’s prospects as it encountered the longest stint of falling business investment since World War II.
Broadbent said in a speech that the failure to come up with a clear path before the original Brexit date of March 29 had left firms in uncertainty over their investment decisions and significant projects.
He said business owners and investors have already been “feeling the consequences” and warned that delaying Britain’s leave from the EU further means extending the uncertainty for crippled companies and endangers hitting the broader economy.
Broadbent, a former Goldman Sachs banker, also sought the Bank of England to assure borrowers that any increase in interest rate would be gradual after Governor Mark Carney earlier said that improvements should be more frequent than what financial markets expect.
His comments came at a time when the fate of Britain’s EU withdrawal became uncertain, with hopes of any progress in talks between parties are fading.
BoE’s forecasts issued earlier revealed the UK is heading for the longest run of falling investment during the post-war era, having already shrunk for four successive quarters. If the delay continues, it could lead to a further decline in the economy, said Broadbent.
The UK relies on investment for making it collectively more productive and in a better position.
In April the International Monetary Fund warned Britain’s economy would be severely hit and would slip into recession if there would be no apparent Brexit deal.
In a no-deal scenario, the IMF estimated the British economy would shrink and would only recover its last year’s level of output in 2021, instead of growing about 4% in the following three years.