Mr Carney said uncertainty over the UK’s departure from the European Union could soon come to an end after the Prime Minister struck a new agreement with Brussels.
But the Bank predicted the impact of Brexit and a slowing global outlook means the UK economy is set to grow by one per cent less over the next three years compared to forecasts made in August.
Meanwhile, the Bank also announced today that interest rates would be held at the current level of 0.75 per cent.
Mr Carney said there were now greater risks from a global slowdown but there was also some room to hope that Britain’s protracted split from the EU might end soon.
The Governor said: ’Now it’s become possible that the picture in the UK could change, with the recent UK-EU withdrawal agreement creating the prospects for a pick-up in UK growth.
‘The pace of that recovery will depend critically on the extent to which uncertainty over the future UK-EU trading relationship actually dissipates, and, to a much lesser degree, by how much the global economy actually picks up.’
Mark Carney, the outgoing governor of the Bank of England, said the global economic picture had ‘darkened’
He added: ’At a time when news about the political and economic outlook seems to move hourly, it’s important to step back and look at the bigger picture.
‘Globally, that big picture has darkened.’
The latest projections from the Bank’s Monetary Policy Committee (MPC) forecast a slump in GDP of around one per cent by the end of 2022, compared to forecasts from earlier this year.
GDP forecasts were downgraded to 1.2 per cent for 2020 from 1.3 per cent, and to 1.8 per cent in 2021 from 2.3 per cent.
The figure for 2019 was bumped up to 1.4 per cent from the previous forecast of 1.3 per cent.
Today’s forecasts represent the first time that the Bank has modelled the potential impact of Mr Johnson’s Brexit deal on which he is fighting the general election.
The committee said that three quarters of the projected slump was driven by the ‘weaker global environment’ and recent ‘moves in asset prices’.
The remaining quarter of the fall in projections came from the impact of the proposed Brexit deal and the 2019 spending round.
Boris Johnson, pictured on the election campaign trail in Stockton-on-Tees today, is fighting for a Commons majority so that he can
Previous forecasts by the Bank had been based on spreading the impact of Brexit on UK GDP over a 15-year period.
But the new projections highlight that a greater proportion of the adjustment to new trading arrangements is likely to take place in the next three years which could cause a faster than previously predicted slowdown in overall growth.
Any deal would have led to a cut in growth forecasts, but increased certainty will help to drive a near-term pick-up in investment growth, the bank added.
Mr Carney is due to step down as the Bank’s Governor at the end of January having extended his tenure twice because of Brexit turmoil. His replacement is yet to be announced.
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