The Bank of England. Picture: REUTERS
The Bank of England. Picture: REUTERS

London — Most of the Brexit uncertainty that has been overshadowing the UK economy has lifted, though it is too early to say business investment is fully returning, says Bank of England (BoE) chief economist Andy Haldane.

A “big chunk, if not all” of the uncertainty has dissipated, Haldane said in answer to questions following a speech at Bloomberg’s European headquarters in London on Monday. That is contributing to investment starting to pick up, but it is “too early to declare victory”, he said.

Recent surveys on manufacturing, housing and consumers have improved, indicating the economy is beginning to bounce back after a year of huge political uncertainty related to Brexit. The Bank of England left interest rates unchanged last month, and the better economic numbers are undermining the argument of dovish policymakers that a cut is needed to support growth.

Bloomberg Economics forecasts that the BOE will not change its benchmark at all this year, holding it at 0.75%.

There are still Brexit risks, however. While Britain managed to agree a withdrawal deal with the EU, it still has to negotiate a new trading relationship by the end of this year. The outbreak of the coronavirus could also weigh on global growth, with repercussions for the UK.

Globally, the economy has grown stronger since the financial crisis more than a decade ago, Haldane said. Banks’ balance sheets are in better shape and he does not see a build-up of new asset bubbles.

While trade has been hurt by US-China tensions, it is unlikely to lead to a “wholesale retrenchment” of globalisation, he said.