Bank of England governor Mark Carney warned that the risk of a no-deal Brexit is now “alarmingly high”, adding that it’s “absolute nonsense” to think such a scenario could easily be managed.
Carney told Sky News: “The government, as expressed by the prime minister, is against no-deal, the European Union is against no-deal, and yet it is a possibility – it is the default option.”
Carney said in August last year that the risk of the UK leaving the EU without any transition deal “felt uncomfortably high”. The governor said that the situation has not improved since his comments last year. “Unfortunately I think it proved accurate. It’s alarmingly high now.”
British Prime Minister Theresa May said on Tuesday that she plans on seeking another delay to Brexit. The PM held talks with Labour Party leader Jeremy Corbyn on Wednesday to break the Brexit deadlock – the two agreed a “programme of work” to try to find a way forward to put to MPs for a vote.
Mr Carney told Sky News: “We’re in a situation where the expressed will of Parliament is for some form of deal, so to put it in the double negative – Parliament is against no deal, the government, as expressed by the prime minister, is against no deal, the European Union is against no deal, and yet it is a possibility, it is the default option.
“So no deal would happen by accident, it would happen suddenly, there would be no transition – it is an accidental disorderly Brexit.”
Carney also said that it is “absolute nonsense” to believe that Britain would be able to continue free trade with the EU while negotiations are in progress under Article 24 of the General Agreement on Tariffs and Trade – an idea that several Brexiteers have promoted.
“Forget the fiction… it’s absolute nonsense. It needs to be called out.”
Mark Carney says it’s a “myth” that the UK could maintain zero tariffs in a Brexit on WTO rules.
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“Forget the fiction, it’s absolute nonsense. It needs to be called out,” he said.
“I might point out that they want to become better acquainted with the Secretary of State for Trade [Liam Fox] who in Parliament has made the point that it cannot apply unless both parties agree, and unless you’re moving towards a – guess what – a customs union.”
Carney reiterated that the country’s financial sector was prepared for the impact of a disorderly no-deal Brexit.
“There are lots of things to worry about in the event of a no-deal Brexit, but the financial sector is not one of them,” Carney said. However, he added that “financial stability is not the same as market stability – it doesn’t mean asset prices aren’t going to change and the currency isn’t going to change, and it is not the same thing as economic stability”.