BOE's Carney Says Risk of No-Deal Brexit Is Alarmingly High
BOE's Carney Says Risk of No-Deal Brexit Is Alarmingly High
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The risk of a no-deal Brexit is now “alarmingly high,” according to Bank of England Governor Mark Carney, who described some claims about how the U.K. could manage such a situation as “absolute nonsense.”
Leaving the European Union without an agreement has become the “default” outcome despite being opposed by Parliament, and could happen by accident, he said in a Sky News interview broadcast Wednesday.
Sky also reported that Carney said he won’t be staying in the BOE role beyond January 2020. He’s already extended his term twice because of Brexit.
While Britons shouldn’t worry about the financial sector if that does occur, the governor outlined the risks to businesses despite recent progress in contingency planning.
“We can’t get a single more lorry through the port of Dover,” he told Sky. “Nor can we fundamentally change the economics of a business in Scotland that sells to the European Union at present on a tariff-free basis, where it’s product standard is instantly recognized so it has frictionless trade, if overnight it has to pay a large tariff on those goods -- which overnight it will because Europe will flip to WTO. Forget the fiction.”
There was also a warning about a hit to house prices and the pound.
“Financial stability, the system functioning, isn’t the same as market stability,” he said. “It doesn’t mean asset prices aren’t going to change, it doesn’t mean the currency isn’t going to change and it’s not the same thing as economic stability.”
Carney has long been criticized by pro-Brexit lawmakers, who accuse him of pushing a negative view that shows a bias to staying in the European Union. The governor has responded that the BOE is obliged to produce forecasts and its specific Brexit scenarios were requested by U.K. lawmakers.
Carney’s predecessor, Mervyn King, has also spoken on Brexit in the past week. The long-time supporter of Brexit said that leaving without a deal would have some “short-run dislocation costs,” but he discounted some of the more dramatic claims about “queues of lorries.”
--With assistance from Catherine Bosley.
To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net
To contact the editor responsible for this story: Fergal O'Brien at fobrien@bloomberg.net
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