While its peers in advanced economies have registered double digit growth, Britain has much to do to catch up with them. Clouds on the horizon are however clearing following increased clarity on how Brexit would impact its future trade relationship with the European Union, the largest trade bloc in the world.
On Friday, in an interview to the BBC, Mark Carney, Bank of England’s Governor disclosed that the British economy could pick up steam later this year once it gets more clarity on its future relationship with the European Union.
“There is the prospect this year, as there is greater clarity about the relationship with Europe and subsequently with the rest of the word, for a recoupling – if I can use that term borrowed from Gwyneth Paltrow – a conscious recoupling of the UK economy with the global economy,” said Carney. “The world economy is accelerating, and we haven’t seen that yet”.
Following the Brexit vote, the growth of the British economy has been much lower compared to the other G7 countries over the first three quarters of 2017.
Economic data, to be released later today, is expected to show that the growth of the economy remained unchanged in the fourth quarter as well.
Economists expect the central bank, the Bank of England, to raise interest rates towards the end of 2018, however some opine that it could come as early as May. In November 2017, the central bank had raised interest rates in more than a decade following signs that wages would rise more rapidly after falling behind inflation.
During the interview, Carney told the BBC that Brexit had cost Britain’s economy tens of billions of pounds in lower economic growth as well as reduced investment by companies who are waiting for more clarity on how Brexit would impact their operations.
“Investment in advanced economies is growing at double-digit rates, and it is low single digits here,” said Carney.