British business investment will probably stay low for the next few years because uncertainty over what Brexit will mean for the country’s economy is unlikely to lift quickly, Bank of England interest-rate setter Jonathan Haskel said on Monday.
Britain might need more than the 21 months foreseen in the withdrawal agreement that Prime Minister Theresa May struck with Brussels last year — but which still faces opposition in parliament ahead of the scheduled Brexit date of March 29 — Haskel said.
“Second, to make long-term investments, an investor also needs … to know the future trade relationship that we strike. That is far from certain,” he said in his first speech since joining the BoE’s Monetary Policy Committee in September.
Companies need to know whether Britain would end up with a customs union agreement with the EU or instead strike a free trade agreement in order to have a sense of how high any new barriers to trade with the bloc will be, he said.
“The longer term question is whether investment will eventually bounce back after uncertainty is resolved. The answer to this depends on what trade deal is struck,” he said.
“At least for the next few years the prospect of low investment seems possible.”