Risk of No-Deal Brexit ‘Uncomfortably High’, Bank of England Chief Warns

Risk of No-Deal Brexit ‘Uncomfortably High’, Bank of England Chief Warns

Even though a no-deal Brexit is “highly undesirable”, the risk it will materialize is “uncomfortably high”, according to Bank of England Governor Mark Carney.

“[No-deal Brexit is] a relatively unlikely possibility, but it is a possibility,” Carney told the BBC’s Today program.

He argued having a post-Brexit transition period was “absolutely in the interest” of both the EU and UK.

Britain is set to leave the European Union on March 29, 2019, which is supposed to be followed by 1.5-year-long transition period, until December 31, 2020.

However, a transition period would only be in place if any kind of a withdrawal agreement, or at least a joint Brexit declaration (the criticized “blind Brexit” option) is made.

The Governor of the Bank of England insisted that the UK’s financial system was robust and could withstand shocks.

“”There is a very broad range of potential outcomes to these Brexit negotiations and we are entering a crucial phase… We have made sure that banks have the capital, the liquidity that they need and we have the contingency plans in place, ” he said.

In his words, a Brexit without a withdrawal deal would result in disruptions for business and trade and price hikes, at least temporarily.

“Our job in the Bank of England is to make sure that those things don’t happen. It’s relatively unlikely but it is a possibility. We don’t want to have people worrying that they can’t get their money out,” Carney said.

“We’ve put the banks through the wringer to make sure that they have the capital. Whatever the shock could happen from, it could come from a no-deal Brexit, we’ve gone through all the risks of a no-deal Brexit,” he elaborated.

At the same time, thought, he pointed out that the EU governments also had issues to solve on their part as banks could not cope with all potential financial problems stemming from Brexit.

“The UK has taken all the steps, all the secondary legislation it needs to. The European authorities still have some steps they need to take. We’re having conversations and we expect those to be addressed,” Carney said.

(Banner image: Flickr)

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