Carney defends his gloomy Brexit predictions adding that major uncertainties lie ahead

The Bank of England has defended its earlier gloomy predictions for UK growth after Brexit, but added the country still faced uncertainties after its vote to leave the European Union.

The bank's new forecast, published on Thursday, is for growth of 2% this year, well above the 1.4% forecast they made in November.

Bank governor Mark Carney said in a press conference that Chancellor' Philip Hammond's November Autumn Statement eased tax policy over the coming years, the global economy was firmer than expected and UK credit conditions remained healthy.

He added: "The thing that we missed is the strength of consumer spending and consumer confidence associated with that which has been present throughout this process."

But the governor warned that the consequences of Britain's vote for Brexit were only just unfolding.

He said: "This stronger projection doesn't mean the referendum is without consequence. Uncertainty over future arrangements is weighing on business investment, which has been flat since the end of 2015.

"Business investment is expected to be around a quarter lower in three years' time than projected prior to the referendum, with material consequences for productivity, for wages and for incomes. The Brexit journey is really just beginning."

Among a package of measures the Bank also kept interest rates at 0.25%.

Carney said that the economy could run without a higher rate. But if wages grow faster than expected then a rate rise might be needed, although he added this was not to be taken as a direct signal.

Fifteen minutes of fame

The central bank added it expects inflation to hit its intended 2% target in the current quarter, before growing to 2.7% in early 2018 and 2.6% in early 2019.

Carney said the looming overshoot is "entirely" because of the 18% fall of the pound since the June Brexit vote, pushing up the cost of imports.

Carney was asked whether his job had become harder in light of US President Donald Trump giving his strong views on the currencies of other countries.

The governor said: "We are now entering the last few seconds of central bankers' 15 minutes of fame, to quote Andy Warhol. And that's a good thing. The idea that central banks were the only game in town, to address the economic crisis, is now expiring."