BoE's Carney defends Brexit warnings

06 Décembre, 2018, 17:24 | Auteur: Auguste Feret
  • Mark Carney warns no-deal Brexit could see 10% shopping bill hike

Less than half United Kingdom businesses have initiated contingency plans for a no-deal Brexit, says Mark Carney.

On Tuesday, Carney defended the central bank amid criticism from Brexiteers, who slammed the BoE for publishing "highly speculative" forecasts.

Mr Carney's comments follow the Bank's stark warning last week on the havoc a no-deal Brexit could wreak, with the worst-case scenario sending Britain into a recession worse than the financial crisis.

There was no exam crisis. Its worst-case scenario for a chaotic exit sees the economy shrinking by 8 percent within a year, property prices plunging nearly a third and the pound losing a quarter of its value to below parity with the dollar. We didn't just stay up all night and write a letter to the Treasury Committee. "We didn't say up all night".

Carney's appearance in front of MPs comes on day one of a five day debate in the House of Commons on May's proposed Brexit deal, and ahead of the key meaningful vote on December 11.

"It saddens me to see the Bank of England unnecessarily drawn into this project", he said in an article published by Bloomberg.

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Carney took a couple of barely concealed swipes at King, saying Britain had paid the price for not focusing on risks from the banking sector before the global financial crisis and had misunderstood the importance of wholesale funding for lenders.

"Tail risk is tail risk", he said, adding that it was "low probabilty that all these risks would happen at the same time".

In the most extreme no-deal scenario, he said shopping bills could rise by up to 10%, but even in an orderly no-deal withdrawal, with a transition period, he said grocery prices could rise by 6%.

The stability of the economy could be at risk because Britain would have to implement the EU's rules without a say on their design.

"Don't assert what is not correct", he snapped at one MP who said the Bank of England had not considered the possibility of substituting trade with the European Union for other markets.

However, despite banks, economists and business leaders issuing countless warnings, Carney said the central bank's stress tests found Britain's financial sector to be resilient and capable of handling Brexit-induced economic shocks.

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