Uncertainty still clouds Mark Carney’s crystal ball Sky’s Adam Parsons casts his eyes over the Bank of England’s Inflation Report and sees predictions shrouded in Brexit-related fog.

Bank of England governor Mark Carney
Image: Mark Carney is due to step down as Bank governor early next year when Brexit should have been completed
  • image/svg+xml Why you can trust Sky News Read through the Bank of England’s Inflation Report and there is one theme that jumps out at you: uncertainty.It is the central theme of many of its predictions. It’s right there in the opening words of the minutes of the Monetary Policy Committee, which says the response to Brexit “whatever form it takes, will not be automatic and could be in either direction”.It’s there in its analysis of the effect of stockpiling, which may – or may not – be pushing up economic growth, only to deflate it in the future.:: Bank of England may not raise rates until 2021
    Carney outlines Brexit pressures on economy

    There’s even a section in the report about “demand and the impact of Brexit-related uncertainties”, which outlines the nervousness that has spread across much of British business. But even here, the analysis does not come to certain conclusions. There is, confusingly, considerable uncertainty about the impact of the uncertainty.At a place like the Bank of England, which prides itself on making long-term predictions rooted in data and analysis, this is uncomfortable stuff. But it does raise some interesting questions.For instance – are we working longer hours because companies are becoming more reluctant to invest? The Inflation Report is quite clear that, over the past year, businesses have lost the appetite to invest in machinery, computer and transport.At the same time, the average employee is working longer hours and a significant number are working for more than 45 hours a week.In short – could we be facing the same situation that followed the financial crisis a decade ago? Then, confronted by tightening market conditions and a global downturn, UK companies appeared to favour employing people over paying for machines. Unemployment didn’t shoot up in the way it did in other countries but productivity suffered in a way that still lingers over the UK economy.So you can read this report in plenty of ways – either as proof that economic growth is resilient, even when it has to deal with the questions laid down by Brexit. You could read it that the economy is facing a shock due to lack of investment.Or, indeed, that it’s proof that the impact of Brexit has been overplayed – that a bit of calm in global politics has helped the UK economy in a way that hardly anyone noticed.Perhaps option four is this – we live in a period of chronic, innate uncertainty. For the moment, we just have to accept that.


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