Surveys show jobs trouble
ahead, but BoE's Carney sees no financial crisis repeat
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[August 05, 2016]
By Andy Bruce
LONDON (Reuters) - Britain's current
economic problems are not a repeat of the financial crisis, Bank of
England Governor Mark Carney said on Friday, even though surveys
bolstered his view that the economy will slow sharply even with billions
of pounds of new stimulus.
Carney was speaking after the BoE cut rates to a new record low 0.25
percent on Thursday and unveiled measures that could amount to 170
billion pounds, a huge stimulus package designed to counter the shock
from June's vote by Britons to leave the European Union.
"People should not worry about the supply of credit, this isn't after
the global financial crisis, this isn't during the euro crisis - this is
a modern financial sector that is working," Carney told LBC radio.
"We're not going through the same experience that the economy went
through in 2008/9/10/11/12, when it was tough."
But Carney repeated that even with BoE's stimulus package, the number of
jobs lost from a slowdown would probably amount to a quarter of a
million over the next few years.
A closely-watched survey of recruitment firms provided an early sign the
BoE might be right, while carmaker Nissan raised doubts about its
long-term investment plans for Britain.
The labor market entered "freefall" after the vote to leave the EU, with
the number of permanent jobs placed by recruitment firms last month
falling at the fastest pace since May 2009, according to the Recruitment
and Employment Confederation.
"The Treasury pay attention to this survey - (it) has a good record of
predicting the labor market. They will be worried," Rupert Harrison,
chief macro strategist for multi-asset at BlackRock who was chief of
staff to ex-finance minister George Osborne, said on Twitter.
Most economists agreed on Thursday that the Bank of England's stimulus
will need to be bolstered by reforms and significant investment from the
government to truly counter the downturn resulting from the vote to
leave the EU.
Prime Minister Theresa May's new government is due to release announce
its fiscal plans in a few months, but the big questions about Britain's
future as a trading power will not be resolved for a long time - a cause
of worry for foreign investors like Nissan.
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Bank of England governor Mark Carney pauses as he speaks during a
news conference at the Bank of England in London, Britain July 5,
2016. REUTERS/Dylan Martinez/File Photo
Its chief executive warned investment decisions in Britain would hinge
on the terms of a Brexit deal struck with the EU.
"The question is what's going to happen in terms of customs, what's
going to happen in terms of trade, what's going to happen in terms of
circulation, particularly of the products," Renault-Nissan Alliance
Chief Executive Carlos Ghosn told the BBC.
"All of these are very sensitive elements that are going to determine,
how and how much we are going to invest in the UK particularly for the
The outlook for the Britain's housing market is also doubtful.
A survey from mortgage lender Halifax showed British house prices fell
in July, reversing gains seen the month before, but it is too soon to
tell if Britain's vote to leave the European Union will have a major
(Reporting by Andy Bruce; editing by Michael Holden/Jermey Gaunt)
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