Bank of England governor Mark Carney warns Brexit fallout will weigh on economic prospects

HE’S got £250 billion pounds on standby and will do whatever it takes, but the Bank of England governor has revealed his “limits” in an unorthodox speech.

THE governor of the Bank of England has warned the UK economic outlook has deteriorated following the Brexit vote which will impact on major trading partners.

Mark Carney said the decision would “weigh on our economic prospects for some time” in an irregular briefing designed to reassure volatile financial markets searching for clues amid political turmoil in the UK.

With both parties effectively leaderless and looking for successors, Mr Carney used his speech to call for clear policy from government and warned “there are limits to what the Bank of England can do”.

“The result of the referendum is clear however it’s implication for the economy are not,” he said, adding that the UK economy can handle change.

“The question is not whether the UK will adjust but rather how quickly and how well.”

FILE - This is a Thursday, Feb. 4, 2016 file photo of Mark Carney, the Governor of the Bank of England, as he pauses, during the quarterly Inflation Report press conference, in London. Bank of England Governor Mark Carney and Fed chair Janet Yellen were due to speak on a panel Wednesday June 289, 2016 but were taken off the updated schedule released Monday June 27, 2016. (Niklas Halle'n, Pool Photo, File via AP)

Speaking in the courtroom of the historic Bank that contains a weather vane to show wind directions that would once affect ships travelling up the Thames, he said the “direction of the wind has now changed”.

“The decision marks a major regime shift ... uncertainty over pace, breadth and scale could weigh on our economic prospects for some time.”

“Moreover, its effects will be reinforced by tighter financial conditions and possible negative spill-overs to growth in the UK’s major trading partners.”

The Canadian governor also said households had experienced a kind of economic “post traumatic stress disorder” that research shows can affect people’s attitude to their finances for the rest of their life.

Calling for clear policy in a time of unprecedented uncertainty, he said having “a plan beats no plan” and political leaders needed to outline the way the UK would do business with the rest of the world.

He also warned that while the bank is committed to soothing the situation and had a plan in place, “one uncomfortable truth is that there are limits to what the Bank of England can do”.

“In particular, monetary policy cannot immediately or fully offset the economic implications of a large, negative shock. The future potential of this economy and its implications for jobs, real wages and wealth are not the gifts of monetary policymakers.”

The comments come after a Consumer Confidence Index in the UK showed a slump to the lowest level since May 2013.

Centre for Economics and Business Research director Scott Corfe told Reuters a “recession certainly cannot be ruled out at this point”.

The UK’s FTSE 100 index has bounced following days of losses after the referendum result, however experts say that is not a sign all is well as most of the companies listed do business outside the UK.