• Rising prices and stagnant wages are what we indicated was going to happen, he said.
• Other countries face comparable challenges.
• There are rising global energy prices and Covid.

The former Bank of England chief blamed Brexit for Britain’s extended inflation.

Mark Carney, who led the Bank before the vote and warned leaving the EU would hurt the economy, said rising prices and stagnant wages are “what we indicated was going to happen”.

Mr. Carney noted that other countries face comparable challenges because to rising global energy prices and Covid.

On Friday, he told BBC Radio 4’s Today Program that the UK faces the “unique” and “extremely unpleasant reality” of sharply raising interest rates while entering its longest recession in 100 years.

Other economists, including Brexit-warning specialists, dispute Mr. Carney’s claims.

However, mortgage payments and investment loans would rise at a time when the Bank would ordinarily lower them to boost economic development.

The former governor, who left for investment banking in 2020, made the following points.

Mr. Carney said a “long-standing hit to productivity” from Brexit has “slowed the pace at which the economy can grow.”

In June, the Resolution Foundation concluded that Brexit has reduced trade openness by 8%, lowering productivity and wages.

Changes in trading restrictions alone will reduce production by 1.3% by the end of the decade, with fishing output falling by 30%.

No substantial research supports the idea that Brexit has considerably increased inflation. But lower pay growth makes it tougher for people to afford rising prices.

‘It was projected that we would receive that, it’s coming to pass,’ Mr. Carney said of the productivity drop.

The former governor repeated his claims from last month but did not specify Brexit’s impact.

‘In 2016 the British economy was 90% the size of Germany’, he told the FT. Now less than 70%.

Jonathan Portes, a former top economist at two government departments, called this “nonsense” and a “dead number” and said the UK’s economic performance since the referendum has been “disappointing but not calamitous”.

Mr. Portes and other academics accused Mr. Carney of conflating exchange rates and GDP, a measure of economic size.

The UK and Germany may have different global purchasing power, but families and businesses’ purchasing power (how much they can afford of what they usually buy) has expanded similarly since 2016.

On Friday, Mr. Carney conceded that the numbers differed but said his choice was “the one that truly matters.”

The former Governor added: ‘This is what we said was going to happen, which is that the exchange rate will fall down and stay down, adding to inflationary pressure.

The economy is overcapacity. The Bank is boosting interest rates to slow the economy due to inflationary pressures from the war in Ukraine and elsewhere.

It believes that too much of it will slow the economy and throw us out of balance. So they have a difficult balance.

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