U.K. Strength May Not Erase Brexit Growth Risks, Fisher Saysby and
Ex-BOE policy maker Fisher says too soon to assess fallout
BOE Governor Carney set to testify in Parliament Tuesday
Former Bank of England policy maker Paul Fisher said it’s still too early to fully assess the potential fallout from Brexit, as the U.K. awaits its first gross domestic product data since the referendum.
Expansion cooled to 0.3 percent in the third quarter from 0.7 percent, economists forecast figures due on Thursday will show. That would mark a far more modest slowdown than some had predicted earlier in the year and put the spotlight on BOE Governor Mark Carney, who warned of the risk of a technical recession and cut interest rates for the first time in seven years after the June 23 vote.
“We don’t know what’s going to happen in the U.K., we just don’t know at this stage,” Fisher, who retired in March after 26 years at the BOE, said in an interview in Sydney. “It’s too soon to tell.”
Carney will appear before the House of Lords’ Economic Affairs Committee on Tuesday to take questions on the state of the economy, interest rates and the pound, which is down about 18 percent against the dollar since the referendum. The cross-party panel said it may also ask if the BOE misjudged the near-term impact of the result.
Fisher said that as the government sets out its bargaining position for the U.K.’s exit from the European Union, it will generate more market-moving events, as happened this month when indications of a hard-line stance by U.K. Prime Minister Theresa May sent the pound lower. It’s fallen almost 6 percent in October.
“As we get news, you will continue to get market reactions and at the moment that’s about as much as you can say,” Fisher said. “Now risks sometimes crystallize, they sometimes don’t and you don’t know when. So it could still go bad,” he said, referring to the economy.
While the economy’s performance this year puts it on track to expand 1.8 percent this year, 2017 could be a far different story. Economists surveyed by Bloomberg see growth at less than half that pace, which would be its worst result since its 2009 recession.