Britain is neglecting deep problems with its economy because of its fixation with Brexit, former Bank of England governor Lord Mervyn King has told Daily Week News.
Lord King said there would have to be a new election and new parliament to resolve the crisis – and said their Brexit strategy should be “just do it”.
Speaking on the fringes of the International Monetary Fund’s annual meetings in Washington DC, the former governor warned that the global economy – including the UK – risked becoming trapped in a “great stagnation” with incomes paralysed for years.
He also warned that Brexit was now getting in the way of addressing the UK’s problems.
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Lord King said: “We’re not looking at the underlying economic challenges for the UK. We have one of the lowest savings rates in the British economy of any country in the G20 save perhaps for Argentina. We’re not saving enough to finance our pensions or care for the elderly, or to finance infrastructure.
“These are the big challenges. What do we do about the education of 50% of people who don’t go to college or university? It’s a great shame this issue [Brexit] has dragged on so long.”
Referring to the draft deal struck by Boris Johnson, Lord King said: “It’s frustrating parliament can’t make up its mind and hasn’t been able to vote but let’s hope they do. I think most people think that this has gone on for far too long and just have the view: just do it.
“It would be really nice to be able to stop talking about it. Everyone is completely fed up with what’s gone on.
“We need a new parliament. We need an election.”
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Lord King added that many economists had been overplaying the potential economic costs of Brexit: “The decision to leave the EU not likely to have a major impact on the UK economy in any way… I think there’s an awful lot of bogus quantification going on to justify positions held for other reasons.”
He warned that, based on its current trajectory, the recent financial crisis and recession looked like it might be more negative for long-term income per capita than the great depression of the 1930s.