London Daily

Focus on the big picture.
Wednesday, Jul 08, 2026

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
Federal Financial Framework Shifts as Treasury Launches Universal Savings Program for Minors
French Court Allows Le Pen to Run for Presidency, but with an Electronic Tag: "I Will Appeal, and I Will Run"
$1.4 Trillion: The Lawsuit That Could Crush Meta
Europe's Growing Struggle with Extreme Heat and Air Conditioning
UK Daily Briefing: Legal Developments and Social Issues
Political Turmoil and Rising Costs
Anthropic Reengineers Agentic Architecture to Shift Autonomous Workplace Automation to the Cloud
Logic Flaw in Windows 11 Permission Architecture Silently Consumes Hundreds of Gigabytes of Local Storage
Apple Advances Late-Stage Operating Systems with Fourth Beta Deployments
Global Crisis Alert: Escalating Middle East Tensions and UK Political Upheaval
UK Parliament Pushes for Greater Domestic Control Over Critical Technologies
UK Parliament Warns Trade Fair and Exhibition Industry Is Losing Global Competitiveness
Police Launch Murder Investigation After Mother and Two Children Found Dead Near Bedford
British Chambers of Commerce Survey Shows Business Confidence Falls to Post-Pandemic Low
UK Parliament Report Warns Britain Risks Falling Behind in Artificial Intelligence Sovereignty
Office for Budget Responsibility Warns United Kingdom Faces Long-Term Fiscal Pressures
Nigel Farage Resigns as Member of Parliament Amid Financial Scrutiny and Triggers By-Election
Deep Purple Has Released Its Best Album in Decades
UK MPs Criticise Student Loan System as Potentially Mis-Sold to Millions of Borrowers
Policy Groups Propose Bank of England-Backed Solar Loan Scheme for Millions of Homes
UK Health Agency Issues Amber Heat Alerts Across Six Regions as Temperatures Rise
Royal Air Force F-35 Jets Conduct First High North Air Policing Missions From Aircraft Carrier
Major UK Companies Join Government Cybersecurity Pledge Amid Rising Digital Threats
UK Sanctions Russian Operatives Linked to Chemical Weapons Programmes and Poisoning Cases
UK Government Expands Free Breakfast Clubs and Limits School Uniform Costs
UK Water Companies Face Tougher Penalties Under New Environmental Enforcement Rules
UK Universities Warn Funding Cuts Could Damage Skills Pipeline and Economic Growth
NHS Expands Artificial Intelligence Tools to Help Reduce Patient Waiting Lists
NHS Ombudsman Criticises Failures in End-of-Life Communication and Patient Care
NHS Launches Nationwide Vaccination Drive After Rise in Measles Cases
UK Government Introduces New Limits on Foreign-Linked Political Donations
Thames Water Creditors Advance £10 Billion Rescue Plan to Prevent Potential Public Ownership
Andy Burnham Prepares Labour Leadership Platform as Party Faces Post-Starmer Transition
UK Met Office Issues Heatwave Alerts for London and Southern England
Keir Starmer Blocks Earlier World Cup Kick-Off Time for England Match Against Mexico
NHS Digital Transformation and Media Consolidation Highlight UK Policy Priorities
UK Government Pushes Digital Trade Rules to Cut Export Costs for Businesses
Bank of England Plans Leverage Rule Changes to Support Government Bond Market
UK Police Operation Targets Organised Immigration Crime Networks With Hundreds of Arrests
Yvette Cooper Calls for Global AI Rules to Prevent Security Risks
NHS Begins Major AI Expansion Through £10 Billion Digital Investment Programme
UK Government Tightens Rules on Political Donations to Limit Foreign Influence
Keir Starmer Defends UK Defence Spending Plan at NATO Summit in Turkey
Comcast’s Sky Agrees £1.6 Billion Deal to Acquire ITV Media and Entertainment Division
Senior NHS Doctors Vote in Favour of Renewed Strike Action Over Pay Dispute
Andy Burnham Set to Succeed Keir Starmer as Labour Leadership Nominations Open
Microsoft Lays Off 4,800 Employees and Xbox Suffers the Hardest Blow
Office for National Statistics Updates Historical Investment Data Review to Improve Accuracy
Department for Science, Innovation and Technology Highlights Economic Gains From Digital Inclusion
Debate Intensifies Over UK Defence Strategy and Domestic Security Priorities
×