Carney upbeat on UK growth prospects

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The Bank of England governor now has more confidence in the UK economy, in a speech which could stoke expectations of an interest rate rise in August.

Mark Carney said recent data had given him “greater confidence” that weak first-quarter growth “was largely due to the weather”.

He said household spending and sentiment had “bounced back strongly”.

England winning the World Cup would be an “unalloyed, unadulterated absolute good” for the economy, Mr Carney added.

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In a speech at the Northern Powerhouse Summit in Newcastle, Mr Carney said: “Overall, recent domestic data suggest the economy is evolving largely in line with the May Inflation Report projections, which see demand growing at rates slightly above those of supply and domestic cost pressures building.”

The pound edged up 0.2% against the dollar to $1.3254 following his remarks.

Last month, three members of the Bank of England’s Monetary Policy Committee – including chief economist Andy Haldane – voted in favour of lifting the interest rate to 0.75%.

Mr Carney was among the six MPC members who voted to keep rates on hold at 0.5%.

He also warned that a global trade war could dampen economic growth.

Mr Carney said “protectionist rhetoric” was rising and was now turning into action: “There are some, tentative signs that this more hostile and uncertain trading environment may be dampening activity.”

He cited evidence from the IHS Markit/CIPS purchasing managers’ index (PMI), which suggested that global export orders and manufacturing output have fallen back from highs at the start of the year.

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On Friday, the US will implement a 25% import tariff on a list of hundreds of Chinese goods. On the same day, China will also impose 25% tariffs on a range of US goods, including pork products, fish and rice.

In a Q&A session after his speech, Mr Carney – who was wearing a Three Lions lapel badge – was asked about the economic impact of an England win.

“It would be an unalloyed, unadulterated absolute good. Everything would be good,” he replied.

The Bank governor also praised the England team’s work ethic, humility and its innovation, adding: “This is a pleasure to watch right now, so we are all behind them.”

When the event host said “In Gareth we trust”, Mr Carney quipped: “I will get my waistcoat this afternoon.”

Source: BBC

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