A senior Bank of England figure has warned more delay to Brexit could further slash business investment in the UK and damage the country´s long-term economic outlook.
The Bank’s deputy governor, Ben Broadbent, said a delay beyond the new deadline of 31 October would harm Britain’s prospects as it faced the longest run of falling business investment since the second world war.
Broadbent said the failure to chart a clear path before the original leave date of March had left firms in limbo over investment decisions and major projects.
He said business investment has already been “feeling the consequences” and cautioned that delaying Brexit further means prolonging the uncertainty for hamstrung companies and risks hitting the wider economy.
The Bank’s forecasts issued last week showed the UK is heading for the longest run of falling investment in the post-war era, having already declined for four quarters in a row.
If this continues indefinitely, it could spell bad news for the economy, said Broadbent. “We rely on investment for making us collectively more productive and better off. That’s clear,” he said.
But assuming a deal is struck, the Bank is forecasting a surge in pent-up spending.
“We think there would be quite a strong bounce-back in investment,” he said. “These are not cancelled projects – it’s delay. If, as a business person, you’re assured that the worst thing is suddenly off the table, that has quite a powerful effect on your incentive to invest.”