(Bloomberg) -- Sign up to our Brexit Bulletin, follow us @Brexit and subscribe to our podcast.
Bank of England Governor Mark Carney Bank of England Governor Mark Carney offered his backing to a key plank of Prime Minister Boris Johnson’s economic plans, acknowledging that his comments were “straying a bit” from his monetary policy remit.
Carney welcomed the government’s attempts to focus productivity improvement efforts on the weaker areas of the country, saying that if the rest of the country could match the levels in Greater London, the economy would be a third larger.
Britain’s regional disparities are wider than most of its peers, and Johnson has said “leveling up” is a top priority for his government, with the budget on March 11 expected to include billions of pounds of new infrastructure projects for northern England and the Midlands.
“I would applaud the government’s focus on these issues because they will take concerted deliberate, multi-faceted policies put in place over a number of years to make a meaningful difference,” Carney said Tuesday. “The prize, in social terms, but also in economic terms, is great.”
Carney noted that he was “straying a bit from his brief,” though with only weeks to go before he leaves the role, he added with a laugh that he’s “demob happy.”
The governor was also asked about the U.K.’s poor productivity performance overall, and cited Brexit as part of the issue more recently. He said uncertainty has played a part, while contingency planning has prevented U.K. firms from focusing on strategy, creating an additional drag.
During the nation’s negotiations to leave the European Union, productivity probably lost about 2 percentage points. Two thirds was due to uncertainty weighing on investment and the rest from this “distraction effect,” he told parliament’s House of Lords‘ Economic Affairs Committee in London. The impact was particularly marked among manufacturers and financial services companies.
“Time spent on contingency planning is time not spent on strategic initiatives,” Carney said. “It’s appropriate from a risk management perspective but it has taken away efforts.”
To contact the reporter on this story: Lucy Meakin in London at firstname.lastname@example.org
To contact the editors responsible for this story: Paul Gordon at email@example.com, Fergal O'Brien, David Goodman
For more articles like this, please visit us at bloomberg.com
©2020 Bloomberg L.P.