- Mark Carney, BoE Governor
The Bank of England warned Britain's economy would slow sharply, and could even slide into recession, if Britons voted to leave the European Union. The central bank added the Pound could decline sharply, while unemployment would probably climb. Consumers could delay spending and companies may postpone investment decisions. BoE Governor Carney said there were limits to what the BoE could do in response to an "Out" vote. Opinion polls show British voters have been relatively resistant so far to warnings about the economic costs of Brexit, with voting intentions in many polls roughly evenly split.
The Bank of England's May Inflation Report estimates that inflation will return back to the 2% goal by mid-2018, with the Brexit uncertainty weighing on the short-term growth outlook. Given the current threats, even with the UK remaining part of the EU, the BoE is not expected to hike interest rates before 2018. Also, the BoE revised down its outlook for short-term growth to 2% in 2016, from 2.2% predicted in February. At the same time, the BoE also lowered the GDP outlook for 2017 to 2.3%, from 2.4%, and to 2.3% from 2.5% in 2018. All forecasts in the May Inflation Report were made assuming that the British voters will support continued membership in the EU in the referendum.
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