Carney blames Brexit for dampening pay growth

THE Governor of the Bank of England has blamed Brexit for sluggish wage growth, saying it may have hampered the country’s economic output.

Mark Carney, whose tenure has been extended to 2020, told an audience in Dublin that “Brexit has had an additional dampening effect” on pay growth.

This was because it had caused uncertainty and put businesses off investing in technology that could improve productivity, which is measured by a worker’s output per hour and is a crucial determinant of wage rises. It follow reports that he told a no-deal preparatory Cabinet meeting on Thursday that a disorderly Brexit could trigger a 35pc fall in house prices. Mr Carney said: “The Bank of England is well prepared for whatever path the economy takes, including a wide range of potential Brexit outcomes.”

Following his speech, he said the house-price warning was not a “prediction of what’s going to happen” but reflected what the Bank would “have to be prepared to do” if there was a sudden shock to the economy.

Suggestions of a housing crash were rebuked by former Brexit minister David Jones for spreading “gloom and despondency”.

The Institute of Economic Affairs released an analysis which claimed Brexit had not had as great a negative an impact on the economy as some banks suggested. Julian Jessop, chief economist, said: “Mark Carney noted in May that the level of UK GDP was between 1.5pc and 2pc lower than the path implied by the Bank’s pre-referendum forecasts.

“But to call this the Brexit impact, you have to assume that those earlier forecasts would otherwise have been right, and that all the shortfall was due to the vote to leave.”