(Bloomberg) — Brexit is partly to blame for stubbornly high inflation levels seen in the UK, former Bank of England Governor Mark Carney told the Telegraph in an interview.
Carney, who led Britain’s central bank for seven years until 2020, was a vocal critic of the country’s split from the European Union, warning that it could cause a steep drop in house prices, a deep recession, and rising inflation.
While Europe’s energy crisis and other supply shocks have contributed to the spike in costs, Brexit has been a major factor in a “unique” economic adjustment taking place in the country, he told the paper.
“We laid out in advance of Brexit that this will be a negative supply shock for a period of time and the consequence of that will be a weaker pound, higher inflation and weaker growth,” the paper quoted him as saying. “There’s no joy in saying: well, ‘we told you so’ because people are having to live with that reality.”
His comments come as the UK’s unexpectedly strong inflation and wage data set the stage for further rate hikes from the Bank of England. Investors have priced in more than a full percentage point of increases over the next year, which would take the benchmark lending rate to its highest in two decades.
Read more: Britain Faces Recession and Flood of Job Losses If Rates Hit 6%
Consumers should brace for paying higher borrowing costs for the foreseeable future, as rates will remain high for years to come, Carney told UK broadcaster ITV earlier this week.