MPs press Carney on post-Brexit predictions

MPs press Carney on post-Brexit predictions

MPs have asked the Bank of England governor, Mark Carney, if he stands by his predictions for the UK economy post Brexit.

Nicky Morgan MP, who chairs the Treasury select committee of the House of Commons wrote to Mr Carney to enquire whether his view has changed since he published six scenarios for the UK economy for the time period 2019-2023.

He published the analysis in November 2018. Mr Carney has repeatedly said his "base case" for the UK economy is that the UK exits the European Union with a deal. If this base case happens, the Bank of England forecasts the UK economy would grow every year between now and 2023. 

Mr Carney told the Treasury select committee in July that the outlook for the economy had deteriorated in recent months as a result of worsening global economic conditions. 

The central bank’s view is that Brexit will reduce the UK’s long-term, or trend, growth rate from 2 per cent per year, to 1.5 per cent per year as a result of a decline in the relative size of the working age population, due to lower levels of immigration. 

Ms Morgan wrote: "In your reply to this letter I would be grateful if you could tell me whether that analysis remains fully relevant given any developments in economic data, intelligence or modelling, since November.

"If not, I would appreciate it if you could explain how developments since November may have changed the outlook in each scenario and, where it aids understanding, provide the committee with an updated version of the economic analysis."

Ms Morgan said: "Economic analysis of the Withdrawal Agreement and Political Declaration that was produced at the Treasury committee’s request will be almost a year old on the 31 October Brexit deadline.

"As the committee requested prior to the first meaningful vote, we have asked HM Treasury and the Bank of England to, where necessary, provide updated analysis of the economic impacts of the key scenarios for the UK’s future economic relationship with the EU.

"This will ensure that Parliament is as informed as possible as it considers key decisions about the future of our country."

Separately, the Office for Budget Responsibility (OBR) an independent economic forecasting body, has released its view that a no-deal Brexit would cause a £60bn hit to the UK economy, compared with a £29bn hit if there is a Brexit with a deal. 

The OBR expects that a no-deal Brexit would lead to the UK economy shrinking by 2 per cent in 2020, before recovering in 2021.

Mr Carney has said if the UK leaves without a deal, he expects the banking system would be able to cope, and that the central bank could pump up to £300bn into the economy.