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Brexit delay will harm long-term economic outlook, says Bank Brexit delay will harm long-term economic outlook, says Bank
(3 months later)
A senior Bank of England policymaker has warned more delay to Brexit could further depress business investment and damage the long-term economic outlook.A senior Bank of England policymaker has warned more delay to Brexit could further depress business investment and damage the long-term economic outlook.
The Bank’s deputy governor, Ben Broadbent, said a delay beyond the new deadline of 31 October would harm Britain’s prospects as it faced the longest run of falling business investment since the second world war.The Bank’s deputy governor, Ben Broadbent, said a delay beyond the new deadline of 31 October would harm Britain’s prospects as it faced the longest run of falling business investment since the second world war.
Speaking to the Press Association, Broadbent said the failure to chart a clear path before the original leave date of 29 March had left firms in limbo over investment decisions and major projects.Speaking to the Press Association, Broadbent said the failure to chart a clear path before the original leave date of 29 March had left firms in limbo over investment decisions and major projects.
Theresa May will take her final session of prime minister's questions before offering her resignation to the Queen. Her successor will then take over as prime minister. 
The final sitting day in the Commons before it breaks for the summer recess.
Brecon and Radnorshire byelection. Tory candidate Chris Davies is seeking to regain the seat he was ousted from by a recall petition triggered in the wake of his conviction for submitting false expenses claims. If he fails, the new prime minister's working majority in the Commons will be cut to just three. 
G7 summit in Biarritz. The new prime minister's first appearance at a major global summit. Donald Trump will be among the world leaders at the gathering, potentially providing the opportunity for a meeting with the controversial US president in an effort to highlight the importance of the special relationship and a future trade deal. 
The UN general assembly meeting in New York will provide another opportunity for the new prime minister to appear on the global stage and set out their vision for the country's place in the world. 
Conservative party conference. The gathering in Manchester will be a key test of the new Tory leader's ability to unite the party and provides a platform to use their closing speech to address the nation. 
The deadline for reaching a Brexit deal. Unless there is a further extension, this will be the UK's last day as a member of the European Union and it will leave, with or without an agreement.
He said business investment has already been “feeling the consequences” and cautioned that delaying Brexit further means prolonging the uncertainty for hamstrung companies and risks hitting the wider economy.He said business investment has already been “feeling the consequences” and cautioned that delaying Brexit further means prolonging the uncertainty for hamstrung companies and risks hitting the wider economy.
Broadbent came to prominence last year following a rebuke from the head of the TUC, Frances O’Grady, for saying the economy was in a “menopausal stage” to illustrate how its best days were in the past.Broadbent came to prominence last year following a rebuke from the head of the TUC, Frances O’Grady, for saying the economy was in a “menopausal stage” to illustrate how its best days were in the past.
The former Goldman Sachs banker, who sits on the Bank’s interest rate setting committee, also sought to assure borrowers that any interest rate hikes would be gradual after the governor, Mark Carney, said last week that increases would need to be more frequent than financial markets expect.The former Goldman Sachs banker, who sits on the Bank’s interest rate setting committee, also sought to assure borrowers that any interest rate hikes would be gradual after the governor, Mark Carney, said last week that increases would need to be more frequent than financial markets expect.
His comments came as the fate of Britain’s EU withdrawal deal hung in the balance, with hopes of any progress in cross-party talks fading fast.His comments came as the fate of Britain’s EU withdrawal deal hung in the balance, with hopes of any progress in cross-party talks fading fast.
“It’s pretty clear that investment has been feeling the consequences of the uncertainty about Brexit and particularly the possibility of a bad outcome,” said Broadbent. He added that it “makes sense for firms to wait for news if they expect the news to come soon”.“It’s pretty clear that investment has been feeling the consequences of the uncertainty about Brexit and particularly the possibility of a bad outcome,” said Broadbent. He added that it “makes sense for firms to wait for news if they expect the news to come soon”.
“If you continually expect news to arrive imminently – a resolution – then that can have quite a depressing effect on investment,” he added.“If you continually expect news to arrive imminently – a resolution – then that can have quite a depressing effect on investment,” he added.
The Bank’s forecasts issued last week showed the UK is heading for the longest run of falling investment in the post-war era, having already declined for four quarters in a row.The Bank’s forecasts issued last week showed the UK is heading for the longest run of falling investment in the post-war era, having already declined for four quarters in a row.
If this continues indefinitely, it could spell bad news for the economy, said Broadbent. “We rely on investment for making us collectively more productive and better off. That’s clear,” he said.If this continues indefinitely, it could spell bad news for the economy, said Broadbent. “We rely on investment for making us collectively more productive and better off. That’s clear,” he said.
Interest rates: welcome to UK plc, an economy in limbo | Larry ElliottInterest rates: welcome to UK plc, an economy in limbo | Larry Elliott
But assuming a deal is struck, the Bank is forecasting a surge in pent-up spending.But assuming a deal is struck, the Bank is forecasting a surge in pent-up spending.
“We think there would be quite a strong bounce-back in investment,” he said. “These are not cancelled projects – it’s delay. If, as a business person, you’re assured that the worst thing is suddenly off the table, that has quite a powerful effect on your incentive to invest.”“We think there would be quite a strong bounce-back in investment,” he said. “These are not cancelled projects – it’s delay. If, as a business person, you’re assured that the worst thing is suddenly off the table, that has quite a powerful effect on your incentive to invest.”
Despite this rebound, the Bank is still forecasting business investment in three years’ time to be far short of the level the UK was due to achieve before the most recent delay and “miles behind” forecasts that preceded the EU referendum shock, according to Broadbent.Despite this rebound, the Bank is still forecasting business investment in three years’ time to be far short of the level the UK was due to achieve before the most recent delay and “miles behind” forecasts that preceded the EU referendum shock, according to Broadbent.
EconomicsEconomics
BrexitBrexit
Bank of EnglandBank of England
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