Monday 29 August 2016 10:10am
Lynsey Barber
The Brexit vote has not had as bad an effect on the economy as forecast (Source: Getty)
“We are now in a better position to rebalance the UK economy,” said Lord King of Lothbury, who headed up the central bank between 2010 and 2013.
“The UK economy has to be rebalanced one way or another, remain or leave. We need a level of the exchange rate much closer to the level we had in the middle of 2013,”
He also criticised a decision to align the government's campaign with forecasts made by the Treasury which were "highly speculative", portraying them as a inevitable, speaking to Central Banking magazine.
“An unfortunate aspect of the campaign was the government forecasts of what the consequences of Brexit might be, which inevitably were highly speculative, in particular for the long run.
“The problem is that the long-run judgment then feeds back to the short-run forecast because it was assumed that people would anticipate the long-run. The only honest answer about the long-run consequences is we don’t really know.”
The Treasury forecast released before the June referendum warned the country would slip into recession. However, recent economic data on manufacturing, employment and consumer spending indicates the impact has been less severe than expected in the aftermath of the vote.
