Bank of England Governor Mark Carney today said the UK’s businesses are in ‘good shape’ but claimed Britain would be booming if it had not voted for Brexit last year.
Speaking after raising interest rates for the first time in a decade, Mr Carney said business uncertainty was dragging down economic growth.
He said it had left Britain falling behind other major economies around the world.
The intervention, on ITV’s Peston on Sunday, risks enraging Brexiteers already suspicious Mr Carney is talking down Brexit.
Senior Tory MP and Brexiteer Nigel Evans told MailOnline Mr Carney’s intervention was ‘absolutely incredible’ and a ‘real problem’.
The governor said that while Brexit was ‘reinforcing’ some of the effects of the 2008 financial crash, he predicted a more optimistic future.
‘We actually think profitability is going to pick up over the next couple of years, but not by the same degree as the past, and it’s that Brexit affect which is weighing on it,’ he said.
‘This uncertainty is going to be resolved in the relatively near future.
‘UK businesses are in very good shape, their balance sheets are in good shape, the financial system is in excellent shape.’
Despite outlining the strength of economy, Mr Carney warned the economy was still being held back.
He said: ‘Since the referendum, what we’re seeing is that business investment has picked up, but it hasn’t picked up to any of the extent that one would have expected given how strong the world is, how easy financial conditions are, how high profitability is and how little spare capacity they have
‘It should really be booming, but it’s just growing. I think we know why that’s the case, because they’re waiting to see the nature of the deal with the European Union.
‘It’s the most important investment destination and [businesses] need to know transition and end state, everybody knows this, the government knows it and is working on it, UK businesses know it and the Europeans know it.’
He added that the further Britain moved from the European single market in its trade deal with the bloc, the harder the hit would be for UK businesses.
‘In the short term, without question, if we have materially less access than we have now, this economy is going to need to reorient and during that period of time it will weigh on growth.’
‘Without question, if we have less access than we have now, this economy is going to have to reorient and during that period of time it will weigh on growth.’
Mr Carney said it was possible that in the event of a bad Brexit deal, the Bank would not be able to cut interest rates in future because of that pressure, although insisted it was ‘not the most likely’ scenario.
Mr Evans said: ‘I know he is independent but he does seem anchored to the Remain doom and gloom.
‘It’s a real problem. If you keeping telling people about the problem of uncertainty, people themselves become uncertain.
‘He’s got it completely wrong. He made a prophecy there would be a shock to the system, unemployment would go up, sales would go down and none of it happened.
‘There is so much good news out there – the stock markets have been hitting record highs and we are exporting around the world to a greater extent.’
Tory MP Damien Moore added: ‘Carney and others were saying the economy would suffer until the Brexit vote and quite the contrary has happened.
‘The economy is strong, exports and jobs are up. We were told the banks would leave and now they are staying.’