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BoE governor warns of delayed Brexit impact from falling pound

Mark Carney speaking at the London School of Economics. Credit: Pool

The Bank of England's governor Mark Carney has warned of a delayed impact on the UK economy because of the falling value of the pound since the UK voted to leave the European Union.

In his first major speech this year, Mr Carney said UK economic growth will take a hit in the coming years as the dropping pound begins to weigh on wages and consumer spending.

Mr Carney said household debt and rising consumer credit will be a key focus for the Bank's Monetary Policy Committee (MPC) as it decides whether or not to raise interest rates in the months ahead.

Mr Carney said that interest rates could go up or down as the country enters a period of higher consumer price inflation.

His comments came as the pound plunged to its lowest level for more than three months following reports that Prime Minister Theresa May will opt for a "hard Brexit", whereby Britain leaves the European single market and falls back on World Trade Organisation rules

Mark Carney said the falling pound would limit the growth of the UK economy. Credit: PA

Sterling had dropped as low as 1.20 versus the US dollar, its lowest level since October's "flash crash".

Experts have conceded that surging prices from weak sterling will bring an end to the consumer spending spree that has helped prop up growth since the EU referendum.