Brexit: Mark Carney warns of no-deal ‘economic shock’

Bank of England Governor Mark Carney Image copyright Reuters

The Bank of England governor has urged MPs to solve the Brexit impasse in a speech warning of growing threats to the global economy.

Mark Carney said that failure to agree a Brexit deal would create an “economic shock” for the UK.

It would also send the wrong message at a time when protectionism was on the rise globally.

“It is in the interests of everyone, arguably everywhere” that a Brexit solution is found, he said.

It comes a week after the Bank cut its UK growth forecasts for 2019, in part because of Brexit uncertainty.

In a speech at the Barbican in London, Mr Carney said there was a “high level of uncertainty” about Brexit and it was clear that “companies are holding back on making big decisions”.

He also restated the importance for the UK economy of securing a withdrawal deal with the EU and a smooth transition.

“A no-deal would be an economic shock for this country, and this would send a signal globally about re-founding globalisation. That would be unfortunate,” he said.

He also described Brexit as an “acid test” of whether a way can be found to broaden the benefits of economic “openness while enhancing democratic accountability”.

Global concerns

At a global level, Mr Carney said that growth had been slowing in “all regions” after peaking at 4% in 2016.

He said that growth was likely to stabilise, but warned that a further slowdown in China, rising trade tensions and complacency could get in the way.

As such, policymakers everywhere needed to avoid being “complacent” about economic risks such as rising consumer debt and the imposition of trade barriers.

“The frequency of financial crises over history is partly because memories fade, financial lobbies are powerful, and the costs of backsliding on financial reform are invisible, at first,” he said.


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