BRISTOL, England (Reuters) - Brexit is distracting Britain’s government and businesses from the longer-term challenges of boosting productivity and living standards, Bank of England Chief Economist Andy Haldane said on Friday.
BoE Governor Mark Carney has previously said Britain’s economy has so far probably grown almost 2 percent less than it would have done if voters had backed staying in the European Union at June 2016’s referendum.
Haldane told a public forum in Bristol, southwest England, that Brexit preparations were delaying longer-term work on boosting Britain’s very weak rate of productivity growth that set in around the time of the 2008 financial crisis.
“Brexit has absorbed a lot of energy ... not just in government but among companies as well. That has probably come at some cost,” he said during a discussion that formed part of the city’s annual Festival of Ideas.
“The plans of government, the plans of companies have to some extent been put on a backburner by dint of having to deal with Brexit. Now the hope would be that once the Brexit deal is done, fingers crossed, those projects that were put on the backburner (...are) delivered on,” he added.
Chancellor Philip Hammond has said he expects weak business investment to get a boost once the government agrees transitional arrangements to deal with the country’s departure from the European Union in less than five months’ time.
Economic data out earlier on Friday showed a sharp fall in business investment during the three months to September.
Britain’s government appointed Haldane last month to lead a government taskforce on improving productivity.
The BoE’s chief economist did not discuss the immediate outlook for monetary policy during the event, but reiterated that he believed further quantitative easing bond purchases would still be able to boost the economy if needed.
Reporting by David Milliken; Editing by Mark Potter