London Daily

Focus on the big picture.
Tuesday, May 13, 2025

Brexit adding to cost-of-living crisis, Mark Carney says

Brexit adding to cost-of-living crisis, Mark Carney says

Brexit has added to the UK's economic woes by lowering the value of the pound and contributing to price rises, an ex-Bank of England governor has said.

Mark Carney told the BBC the fall in the pound and shrinking economy after the UK left the EU had added to "inflationary pressure".

No 10 says soaring prices are being driven by Covid and the Ukraine war.

On Thursday, the Bank warned the UK was facing its longest recession since records began.

In an attempt to cool rising prices it raised interest rates from 2.25% to 3% - the biggest jump since 1989.

A recession is defined as when a country's economy shrinks for two three-month periods - or quarters - in a row.

Inflation - the rate at which prices rise - is at the highest level for 40 years.

The invasion of Ukraine has driven up the price of food and energy, as supplies are disrupted by the war and the West tries to phase out Russian oil and gas.

However, Mr Carney, who was governor of the Bank of England between 2013 and 2020, said Brexit was also helping to fuel inflation and had "slowed the pace at which the economy can grow".

He told BBC Radio 4's Today programme the pound had fallen "sharply" against other currencies after the Brexit referendum in 2016 and "hasn't recovered".

"If I can actually cast your mind back to a few years ago, this is what we said was going to happen, which is that the exchange rate would go down, it would stay down, that would add to inflationary pressure," he said.

"The economy's capacity would go down for a period of time because of Brexit, that would add to inflationary pressure, and we would have a situation - which is the situation we have today - where the Bank of England has to raise interest rates despite the fact that the economy is going into recession."

He added that the UK had experienced "a big hit to our productivity" and "we have to take some tough decisions in order to get it back up".


But Downing Street blamed the impact of the Covid pandemic and the war in Ukraine for the problems in the UK economy.

The prime minister's official spokesman said: "What we are seeing is challenges caused by the pandemic and by war in Europe which have been driving factors in terms of inflation, and we're seeing high inflation in a number of countries around the world."

Asked if he was denying Brexit had caused financial issues, he said: "Our focus is on ensuring we have stability and fiscal credibility. That's what the chancellor and the prime minister are focused on rather than on a decision taken a number of years ago where people made a clear decision."

A fall in the value of the pound makes goods and services which are imported from overseas more expensive, while making exports more competitive.

In September the pound fell to a record low against the dollar, after then-Chancellor Kwasi Kwarteng announced sweeping tax cuts without saying how they would be paid for.

It has since recovered to the level it was at before the so-called mini-budget, after new Chancellor Jeremy Hunt reversed almost all the planned tax cuts.

Newsletter

Related Articles

0:00
0:00
Close
8-Year-Old Orders 70,000 Lollipops Using Mother’s Phone, Prompting $4,200 Amazon Bill and Viral Facebook Plea
Quantum Computing Threatens Bitcoin Security
American citizens account for 70% of worldwide pharmaceutical sales despite comprising only 4% of global population
New Details Emerge on Syrian Attacker's Motives in German Festival Stabbing
UK Introduces New Immigration Policy to Reduce Net Migration
Brazil’s President Aims to Strengthen Ties with China Amid US Trade Tensions
Senate Democrats Move to Censure Trump Over Qatar Jet Gift
First White South Africans Resettled in the U.S. Amid Controversy Over Persecution Claims
Hamas Releases Last Living US Hostage from Gaza Amid Ongoing Conflict
India and Pakistan Agreement on Ceasefire Amid Ongoing Tensions
Arsenal Stages Comeback to Draw 2-2 Against Liverpool in Premier League Clash
Trump's Upcoming Visit to Gulf Nations: Investment and Security at the Forefront
Rodrigo Duterte Awaits Trial at The Hague. Next week he might be elected mayor of his hometown
Trump fires director of U.S. Copyright Office, sources say
Retired British police officer arrested over ‘thought crime’ tweet
Cardinal Robert Prevost Elected as Pope Leo XIV, Marking a Historic Papacy
Newark Mayor Ras Baraka Arrested at ICE Facility Amid Congressional Visit
India-Pakistan conflict may be first test for Chinese military tech
Bill Gates Announces Plan to Wind Down Philanthropic Foundation and Disperse Wealth
Historic Papal Conclave Set to Commence in Rome
Huge Copper, Gold, and Silver Discovery in Argentina and Chile — But the Profits Go Abroad
Prince Harry is pleading for reconciliation — but the royals are just as sick of his victimhood as everyone else
The Road to Freedom: She Protested Putin, Escaped House Arrest, and Survived a 2,800-Kilometer Journey
OpenAI's Flip-Flop: No Longer Going Commercial, Back to Nonprofit, After Musk Lawsuit and Backlash
“Trump Supporter” Aims to Bring a MAGA-Style Shift to Romania
First From China: Zhao Xintong Wins the Snooker World Championship
Nvidia Faces Billion-Dollar Losses – Warns: China Is on Its Way to Becoming an AI Superpower
Trump Rules Out Third Term, Names JD Vance and Marco Rubio as Potential Successors
Mexico Says ‘No’ to U.S. Troops: President Sheinbaum Rejects Trump’s Offer to Fight Cartels
Nigel Farage’s Reform UK Storms the Map, Wrecking the Two-Party Monopoly
DOGE: Reimagining Government Operations with AI
Common Sense Returns to Britain's Legal System: UK Supreme Court Declares a Woman Is… a Woman
Beijing Says U.S. Is ‘Reaching Out’ for Tariff Talks Amid Soaring Trade Tensions
U.K. Court Rejects Prince Harry’s Final Appeal Over Police Security
Prince Harry’s Heartfelt Outburst Rocks the Royal Family
Trump Shares AI-Generated Image of Himself as… Pope, Prompting Outrage Reaction
Transgender Swimmer Secures Five Gold Medals at U.S. Masters Championship
Prince Harry: “I Want Reconciliation with My Family”
Germany's Alternative für Deutschland (AfD) party has now been officially labeled “right-wing extremist” by the federal office for the so-called “protection of the constitution.”
Amazon Launches Satellite Internet Service Amidst Competition with SpaceX
Transformative Changes in Women's Wrestling: The Rise of WWE Superstars
The Rush to the White Gold: Global Investment Surge in Natural Hydrogen Exploration
This is a day in Spain without electricity and internet
Reform UK Surprises in British Elections, Challenging Traditional Two-Party System
180-Year-Old Christian University in South Carolina Announces Closure Due to Unmet $6 Million Fundraising Goal
Brazilian Woman Jailed for Fourteen Years for Writing “You Lost, Idiot” on Statue During Protest
Trump Administration Removes National Security Adviser Mike Waltz Amid Signal Chat Controversy
Dutch Politician Eva Vlaardingerbroek Receives Spyware Threat Alert from Apple
Paramount Board Considers Settlement in Trump’s $20 Billion Lawsuit Over "60 Minutes" Interview
U.S. Economy Shrink in Trump’s First Quarter as Tariff Policy Raises Questions
×