(2 Jul 2019) Bank of England Governor Mark Carney warned on Tuesday that the British economy is barely growing in the wake of mounting Brexit uncertainties and intensified trade tensions.
Carney said in a wide-ranging speech that a "sea change" has taken place in financial markets in recent months largely related to worries over the global economy.
Trade tensions, particularly those involving the US and China, have the potential to "shipwreck the global economy" and that's a fear that's taken root across financial markets.
Though some of those tensions were eased over the weekend when US President Donald Trump and his Chinese counterpart, Xi Jinping, agreed to resume trade negotiations, Carney said it would be wise for investors not to get too carried away.
In the first quarter of the year, the British economy grew by 0.5% from the previous three-month period, though that was largely due to companies bringing forward production to build stocks before the original Brexit date.
Carney, who is set to leave the bank at the end of January after seven years at the helm, said the British economy is having to cope with all these trade tensions at a time of acute uncertainty over the country's departure from the European Union (EU).
Britain was originally set to leave the EU on March 29 but because of the British Parliament's failure to back the deal that Theresa May agreed with the EU, it has been granted an extension until Oct. 31.
Jeremy Hunt and Boris Johnson, who are fighting it out to replace May as leader of the Conservative Party and to become the next prime minister, have indicated that they'd be prepared to back a "no-deal" Brexit on that date if no revised agreement with the EU is struck.
Most economists think such an outcome will lead to a deep recession in Britain as tariffs and other restrictions to trade are imposed.
Carney said markets now think the betting odds for a no-deal Brexit have risen to one-in-three, but that "however Brexit unfolds, we will respond, we will respond to any material change in the outlook."
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