The Times: ‘Brexit costs households £900 a year, says Carney’

The governor of the Bank of England claimed yesterday that households were at least £900 a year worse off and the economy as much as £40 billion smaller as a result of the Brexit vote.

Mark Carney declared that the economy was performing worse than its pre-referendum forecasts in May 2016.

His comments drew immediate criticism from Boris Johnson, the foreign secretary, and other Brexiteers.

Philip Hammond, the chancellor, who voted to remain in the European Union and favours a soft Brexit, did not contest the forecast in the Commons.

“Real incomes are about £900 per household lower than we forecast in May 2016, which is a lot of money,” Mr Carney told MPs on the Treasury select committee. “That’s just relative to what we were forecasting in May 2016, not adjusting up, as one might expect given the strength of the global economy, to where the economy might have been.”

On the state of the broader economy, he said: “GDP is more than 1 per cent below that [May 2016] forecast despite a very large stimulus provided by the Bank of England, a fiscal easing by the government, and global and European economies that are much stronger than they were expected to be. So if you adjust for those factors, the economy is up to 2 per cent lower than it would have been. That’s a reasonable difference.” Two percentage points of GDP is equivalent to £40 billion.


Patrick Minford, chairman of the pro-Brexit group Economists for Free Trade, accused Mr Carney of being incapable of understanding the Brexit process and said he hoped that the next governor would “stop playing politics”.

He said: “The Brexit decision has not reduced growth. Britain is at full employment and wages are accelerating. We could hardly have had fuller employment without the Brexit decision.” Mr Hammond told business leaders at the CBI annual dinner last night that he hoped to achieve a Brexit that protected business. In the clearest sign yet that he believes Mrs May is on course for a soft Brexit, he said: “We are in broad agreement on questions facing our country.”

To read The Times’s characteristically pessimistic story in full, click here.

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