Surveys Indicate Job Challenges Ahead, Yet BoE’s Carney Foresees No Repeat of Financial Crisis – Reuters

By Andy Bruce

LONDON – Bank of England Governor Mark Carney stated on Friday that the current economic challenges facing Britain do not mirror those of the financial crisis, despite surveys indicating a significant slowdown in the economy, even with substantial new stimulus measures in place.

Carney’s remarks came after the Bank of England reduced interest rates to a record low of 0.25 percent and introduced a series of measures that could total around 170 billion pounds. This large stimulus package aims to mitigate the impact of the June referendum in which Britons voted to leave the European Union.

"People should not worry about the supply of credit; this isn’t the aftermath of the global financial crisis or during the eurozone crisis. We have a modern financial sector that is functioning effectively," Carney told a radio station. "We are not experiencing the same difficulties that the economy faced from 2008 to 2012."

However, Carney warned that even with the new stimulus, an estimated quarter of a million jobs could be lost due to the economic slowdown in the coming years.

A key survey of recruitment agencies indicated that the labor market entered a "freefall" following the Brexit vote, with the number of permanent job placements declining at the fastest rate since May 2009. This assessment raises concerns for the Treasury, with experts suggesting it has a proven track record of forecasting labor market trends.

Most economists agreed that the Bank of England’s initiatives would need to be complemented by government reforms and considerable investment to effectively address the downturn resulting from the EU referendum.

In the coming months, Prime Minister Theresa May’s administration is expected to unveil its fiscal strategy, but uncertainties regarding Britain’s position as a trading nation are likely to persist, worrying foreign investors such as Nissan. The carmaker’s CEO has highlighted that investment decisions in the UK will depend significantly on the terms of the Brexit agreement with the EU.

"The critical questions revolve around customs, trade, and the flow of products, all of which are sensitive factors that will influence our investment in the UK, especially regarding the European market," said Carlos Ghosn, CEO of the Renault-Nissan Alliance.

Additionally, the future of Britain’s housing market appears uncertain. A recent survey from a mortgage lender revealed that house prices decreased in July, reversing prior gains. However, it is premature to determine the full impact of the Brexit vote on the housing sector.