London Daily

Focus on the big picture.
Thursday, Jul 23, 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
Northern Ireland Secures Additional Infrastructure Funding From UK Treasury
Wales Approves Port Investment Plans to Support Green Energy Supply Chains
UK Financial Regulator Simplifies Stock Market Rules to Attract More Listings
UK Reports Decline in Small Boat Crossings Across the English Channel
UK Government Creates Emergency Support Fund for Financially Pressured Universities
Scottish Government Launches Economic Strategy Focused on Innovation and Renewable Industries
UK Expands Sustainable Farming Incentives to Support Environmental Measures
UK Government Introduces New Neighbourhood Policing Standards Across England and Wales
UK Competition Regulator Opens Review of Artificial Intelligence Foundation Models
UK Deepens Indo-Pacific Security Cooperation After Talks With Singapore and Japan
UK Announces Rail Modernisation Plan for Northern England With New Infrastructure Funding
UK Government Updates Housing Planning Rules to Accelerate Residential Construction
UK Approves Major North Sea Offshore Wind Project to Support Clean Power Goals
UK Health Service Begins Major Digital Upgrade to Cut Hospital Waiting Times
Bank of England Holds Interest Rates Steady as UK Inflation Pressures Remain Persistent
UK Universities and Industry Expand Space and Defense Research Partnerships
House of Lords Approves Social Housing Bill Amendments on Shared Ownership Rights
House of Lords Advances Civil Aviation Bill With New Passenger Protection Measures
UK Government Suspends Tariffs on Fertilizer and Food Imports to Reduce Costs
Russell Group Universities Support New UK Business Department Focused on Innovation
UK Parliament Opens Inquiry Into Transport Barriers Facing Young Jobseekers
Home Builders Federation Calls for Lower Costs as New UK Government Sets Housing Priorities
Andy Burnham Meets UK Devolved Leaders to Strengthen Regional Cooperation
Andy Burnham Holds First International Calls With Trump, Macron, and Zelenskyy
Andy Burnham Reshuffles Cabinet With John Healey Appointed Chancellor of the Exchequer
Andy Burnham Government Removes VAT From Electricity Bills to Cut Household Costs
Andy Burnham Becomes United Kingdom Prime Minister After Sir Keir Starmer Resigns
Miliband Sets Climate and International Law at Centre of UK Diplomacy
US Gasoline Returns to $4 as Renewed Iran Fighting Disrupts Oil Flows
Czech Central Bank Governor Rejects Early Euro Entry and Rate-Cut Pressure
Trump Orders 50% Tariffs on Selected Canadian Imports
Pentagon Discloses Nearly 100 US Troop Injuries During Renewed Iran Fighting
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
US Judge Pauses Paramount Skydance and Warner Bros Discovery Merger Over Antitrust Concerns
NHS England Faces Growing Retention Pressure Among Younger Midwives
UK Data Centre Expansion Faces Water and Grid Capacity Challenges
UK Defence Shares Rise After John Healey Appointment and Continued Spending Commitments
OECD Urges UK Government to Review Pension Triple Lock to Protect Public Finances
Bank of England Keeps Cautious Approach as Energy Costs Threaten Inflation Progress
County Councils Call for Wider Devolution and Long-Term Social Care Funding Reform
IMF Urges UK Government to Maintain Fiscal Discipline as Growth Forecast Slows
Russian Warship Holds Live-Fire Exercises Near UK Coast as Royal Navy Monitors Activity
Mitie Agrees Three Point One Billion Pound Takeover by OCS in Another Blow to London Listings
JPMorgan Chase Warns Bank Levies Could Hit UK Growth and Drive Capital Away
UK Unemployment Holds at Four Point Nine Percent as Labour Market Shows Resilience
UK Government Borrowing Falls Below Forecasts as Treasury Receives Early Fiscal Boost
John Healey Cuts VAT on Household Electricity Bills After Cancelling National Digital ID Scheme
Andy Burnham Forms New Labour Government With Ten-Year National Renewal Plan
EU Imposes Record €550 Million Digital Services Fine on AliExpress
UK Publishes Updated Consumption-Based Carbon Emissions Data
×