Bank of England Gov. Mark Carney is now giving a more optimistic outlook for the future of Great Britain after Brexit.
Carney ominously warned in May 2016 that if Great Britain were to extricate itself from the European Union (EU), the result would likely be a “technical recession.” Bank of England followed up Carney’s comments in July by freeing up $199 billion in funds and slashing interest rates in hopes of ushering the U.K. through a “period of uncertainty and significant economic adjustment,” Carney told reporters.
Nearly eight months after the June 23, 2016, Brexit decision, Carney appears to be altering his outlook on Brexit. “There are scenarios where this process proceeds relatively smoothly to an increasingly clear end point and that will be consistent with a higher path for interest rates,” he told reporters Tuesday.
The path to a smooth Brexit will be achieved by negotiating “bold, ambitious” trade deals with the EU and other global trading partners. One of the chief concerns raised by those who were espousing less than positive predictions for Great Britain after Brexit was that by leaving the EU, Great Britain would lose its trade deals — ostracizing itself from the European economy, and, in turn, sending it into a recession.
By securing new trade deals with the EU, Great Britain would raise consumer and business optimism. The British economy would also experience higher growth and inflation, which would make banks raise interest rates “for the right reasons,” Carney explained Tuesday.
He did add a caveat to his more optimistic predictions: “There are other scenarios which would be less optimistic or less positive, which could mean that policy is on a lower path than that.”
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