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Free AccessMNI POLICY: BOE's Haskel: No Big Brexit Deal Investment Bounce
By David Robinson
LONDON (MNI) - Even if the UK government's agreement for withdrawal from
the EU is approved by parliament Brexit uncertainty could linger for years to
come, depressing investment, Monetary Policy Committee member Jonathan Haskel
said in a speech Monday.
Following are key points from his inaugural speech as an MPC member, in
which he suggested that there may be no big "Brexit dividend" if parliament
agrees to the deal being pushed by Prime Minister Theresa May, delivered at the
University of Birmingham:
--Haskel cited former top civil servant Ivan Rogers' aphorism that "Brexit
is a process." The EU Withdrawal Agreement, scheduled to be voted on in
parliament this week, sanctions a transitional period of 21 months to four years
under which current trade arrangements continue before the UK moves to
whichever, unspecified, trade deal is agreed. Haskel pointed out that business
would continue to operate under uncertainty over what the UK's future trading
arrangements throughout this period.
--Haskel said that, with the length of the transition period and the future
trade deal unknown, business would face uncertainty when making investment
decisions over long-term trading arrangements.
The long-term question is whether investment bounces back and part of the
answer to this is what the trade deal at the end of the process looks like.
The MPC, in its forecasting process, assumes that the UK moves to an
average of possible Brexit end states, all of which are less advantageous for
trade than current arrangements, with growth lower than if there had been no
Brexit.
"In standard growth models, a lower level of output means less capital
(since the capital/output ratio is a constant) and hence investment does not
bounce back fully since less capital is required," Haskel said.
--"At least for the next few years the prospect of low investment seems
possible," he said.
--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com
[TOPICS: M$B$$$,M$E$$$,MT$$$$,M$$BE$]
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.