Financial markets seem lost in the fog of Brexit | Nils Pratley

The Bank's gloomy forecast sent the pound down but it rose again - despite the threat of recession

Mark Carney could just as easily have shrugged his shoulders and declared that, like the rest of us, he hasn't a clue how Brexit will work out. Instead, the Bank of England governor, obliged to riff on a theme when unveiling new economic forecasts, opted for "the fog of Brexit", which amounted to much the same thing. Sadly, he couldn't say when visibility will improve.

Financial markets, too, seem baffled. The headline news that the Bank was making deep cuts to its GDP forecasts for this year and next sent the pound lower initially. The reaction seemed logical. The cut for 2019 was from 1.7% to 1.2%, which is severe. The new projections rely on a catch-up in the second half of the year just to achieve the slowest rate of annual growth since 2009. A recession this year is put at a one in four chance - and that assumes a no-deal, no-transition Brexit is avoided.