The UK’s decision to leave the EU has hit people’s pockets and made the economy sluggish, the governor of the Bank of England has said.
Mark Carney said the Bank cannot prevent the loss to incomes accompanying Britain’s exit from the EU.
He said household spending has fallen and businesses have reigned in investment, causing the economy to slow.
Carney said: “The UK economy is beginning the process of adjusting to a new and as of yet uncertain economic relationship with the European Union.
“Monetary policy cannot prevent the weaker real incomes likely to accompany the move to new trading arrangements with the EU.
“But it can influence how this hit to incomes is distributed between job losses and price rises, and it can support UK households and businesses as they adjust to such profound change.”
He continued: “Financial markets particularly sterling marked down the UK’s relative prospects quickly and sharply.
“Households looked through Brexit related uncertainties initially, but more recently as the consequences of sterling’s fall have shown up in the shops and squeezed their real incomes they have cut back on sending, slowing the economy.
“Businesses have been somewhere in between, but since the referendum they have invested much less aggressively than usual in response to an otherwise very favourable environment.”