The governor of the Bank of England (BoE) Mark Carney has warned of economic risks by a slowing Chinese economy and “de-globalisation,” if politicians do not find a solution over Brexit.
The UK has just weeks left before the EU scheduled withdrawal on 29 March, Carney said, “it is in the interests of everyone, arguably everywhere … that a Brexit solution that works for all is found in the weeks ahead.”
Carney was speaking at Frobisher Hall in London, he said that business investment in the UK “has fallen 3.7% over the past year despite the ongoing expansion, high business profitability and accommodative financial conditions.
“With fundamental uncertainty about future market access, UK investment hasn’t grown since the referendum was called and has dramatically underperformed both history and peers.”
Carney added that slowing global growth has been prevented by “rising trade tensions and growing policy uncertainty.”
“Global economic policy uncertainty is at record highs. And protectionist rhetoric is becoming reality, with the United States raising tariffs on a range of imports from its main trading partners, and some retaliating in kind.
“If all measures contemplated are implemented, average US tariffs will reach rates not seen in half a century.”
Last Thursday the BoE slashed growth forecast to its weakest in 10-years, growth forecast was cut to 1.2%, its lowest since 2009 when the UK hit a financial crisis followed by a recession.
Carney cautioned that the “fog” of Brexit is increasing the chances of recession, especially if the UK leaves the EU with a no-deal Brexit.
Carney said, “When the economy is growing more slowly, the probability of it having a negative quarter or two goes up.
“If there’s a shock, which… a no-deal transition Brexit would be, it would be a negative shock, then that further increases the possibility of negative quarters.”