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Brexit to make families poorer: Bank of England

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Bank of England Governor Mark Carney speaks during the central Bank's quarterly Inflation Report press conference at the Bank of England in London on May 11, 2017. (Photo by AFP)

The Bank of England has warned about the economic fallout in the aftermath of a Britain’s vote to withdraw from the European Union, saying it is already starting to make families poorer.

Mark Carney, the Governor of the Bank of England, speaking at a press conference in London on Thursday, said the impact of Brexit would contribute to a dramatic drop in payments this year and that average workers would lose hundreds of pounds in wages.

Carney said the year 2017 will be "a more challenging time for British households” and “wages won't keep up with prices for goods and services they consume.”

The governor of UK central bank said wages were falling partly because firms were worried about trading prospects outside the bloc, forcing them to offer “more modest pay settlements”.

Unveiling the bank's trimmed-down predictions for the UK economic growth, Carney went on to say that Brexit was not the sole cause behind the forecasted economic decline and that its effects are expected to dwindle over the course of time.

In October last year, the Bank of England warned that life would turn difficult for Britain’s most vulnerable, as inflation was expected to rise due to a slump in the pound following the vote to exit the EU. It said that around 500,000 jobs could have been at risk if the bank had not cut interest rates in August.

The Bank of England’s forecast in August shows inflation hitting two percent in the third quarter of 2017 and rising to 2.4 percent in the second half of 2018.

The grim outlook for Britain’s economy comes four weeks before a general election that will decide Brexit’s framework as put forth by Prime Minister Theresa May.

The UK central bank has required all financial firms to come up with their Brexit plan by July 14 and brace themselves for all possible consequences.

Although estimates vary for Brexit’s impact on financial jobs across the UK, a maximum of 232,000 positions are expected to vanish in case of a "hard" exit.

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