Brexit to blame for soaring inflation, former Bank of England boss says: ‘We told you so’

Mark Carney says there is ‘no joy’ in laying this out as ‘people are having to live with that reality’

Archie Mitchell
Saturday 17 June 2023 16:54 BST
Where does the Brexit red tape end?

The fallout from Brexit is to blame for Britain’s out-of-control inflation, the former boss of the Bank of England has said.

Mark Carney, who warned leaving the EU was the “biggest domestic risk” facing Britain before the 2016 referendum, said there is “no joy” in being proved right because of the impact on millions of households.

And Mr Carney said as a result of the Brexit “shock”, interest rates are likely to remain higher for years.

“We [the Bank] laid out in advance of Brexit that this will be a negative supply shock for a period of time and the consequence of that will be a weaker pound, higher inflation and it will end weaker growth,” he told The Daily Telegraph. “And the central bank will need to lean against that now that’s exactly what’s happened. It’s happened in coincidence with other factors, but it is a unique aspect of the economic adjustment that’s going on here.”

The economist and banker, who was governor of the Bank of England from 2013 to 2020, said “a certain group of people” said Brexit would be “seamless and positive and driving growth”.

“There was another group of technocrats who, based on analysis, were sceptical of that – and that’s proven to be the case,” he said.

Mr Carney said: “There’s no joy in saying: ‘well, we told you so’, because people are having to live with that reality.”

He faced calls to quit as head of the Bank of England in the run-up to the referendum for wading into politics with his warnings. At the time, Jacob Rees-Mogg said: “It is beneath the dignity of the Bank of England to be making speculative pro-EU comments.”

Mr Rees-Mogg, the former business secretary, told The Telegraph that Mr Carney’s description of Brexit was “obviously nonsense”, instead blaming the Bank’s failures for exacerbating Britain’s cost of living crisis.

The row came days after chancellor Jeremy Hunt warned the UK has “no alternative” but to raise interest rates in an effort to bring down inflation.

Households are braced for a further increase in rates – which already sit at a 14-year-high of 4.5 per cent – from the Bank of England next week.

Mr Hunt said the government will be “unstinting” in supporting the central bank in its efforts to grapple rampant inflation and attempt to bring it back towards a target of 2 per cent.

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