Brexit could affect economy for longer than COVID - BoE's Saunders

Britain and the European Union are still negotiating a trade agreement

  
People sit in front of the Bank of England, as the number of coronavirus disease (COVID-19) cases grow around the world, in London, Britain, March 19, 2020.

People sit in front of the Bank of England, as the number of coronavirus disease (COVID-19) cases grow around the world, in London, Britain, March 19, 2020.

REUTERS/Simon Dawson

LONDON - Bank of England interest-rate setter Michael Saunders said the long-term effects of Brexit could have a bigger impact on companies than the coronavirus pandemic.

"Businesses will shake off the effect of COVID-19 as they’re temporary, but the long-term effects of Brexit could be more permanent," Saunders said in an interview with TheBusinessDesk.com website.

BoE Governor Andrew Bailey said on Monday that a no-deal Brexit would cause longer-term damage to Britain's economy than the pandemic, and the impact of the change might be felt for decades. 

Britain and the European Union are still negotiating a trade agreement ahead of the Dec. 31 expiry of a post-Brexit transition period.

Saunders also said Britain's economy was unlikely to fall into a recession.

"It’s not worth getting too worried about recession at the moment. We had a big recovery in Q3 and there will be a dip in Q4 – but we’re only forecasting a contraction of around 2%," he said.

(Writing by William Schomberg; Editing by Alistair Smout) ((william.schomberg@thomsonreuters.com; +44 207 542 7778; Reuters Messaging: william.schomberg.reuters.com@reuters.net))

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