LONDON (Reuters) - Bank of England rate-setter Gertjan Vlieghe said on Wednesday he did not think the boost to trade from sterling’s weakness after the Brexit vote was fully compensating for a consumer slowdown that he thinks is probably underway.
“I do think there is a positive effect on net exports from the weakness in sterling, it’s not that that doesn’t do anything,” Vlieghe said, answering audience questions after delivering a speech at Bloomberg’s London offices.
“The question is just, given the magnitude of the positive surprise in consumption, once that goes away, is there enough of an improvement in net trade to offset all of that? And at the moment, I don’t think so.”
Britain’s economy strongly outperformed the BoE’s expectations following June 2016’s vote to leave the European Union, largely because of unexpectedly resilient consumer demand. The BoE expects this to fade in 2017 due to higher inflation caused by sterling’s big post-referendum fall.
Reporting by Andy Bruce and Alistair Smout, editing by David Milliken