Carney warns no-deal Brexit possibility is ‘uncomfortably high’

Mark Carney has warned that the possibility of a no-deal Brexit is “uncomfortably high” and will lead to higher prices, as Prime Minister Theresa May cuts short her holiday to try to win support for her blueprint.

The Bank of England governor said both the UK and EU should “do all things to avoid” a no-deal scenario.

He added that the banks have done the “stockpiling” and the country’s financial system is in a position to be able to “withstand a shock” which could result from the UK leaving the EU without an agreement.

Mr Carney’s comments came ahead of Mrs May meeting French President Emmanuel Macron at his summer retreat, Fort de Bregancon, on a small island off the French Mediterranean coast.

After the hastily arranged talks, Mrs May and her husband Philip will join Mr Macron and his wife Brigitte for a private dinner.

Mrs May is ending her break in the Italian Lakes a day early in the hope of winning over the French leader, one of Europe’s key powerbrokers, although she will jet off to Switzerland for a second break later this month.

Mr Carney, appearing on BBC Radio 4’s Today programme, said: “I think the possibility of a no deal is uncomfortably high at this point.”

Asked if no deal would be a disaster, Mr Carney said: “It is highly undesirable. Parties should do all things to avoid it.”

Pushed on what no deal would mean for people, Mr Carney said “disruption to trade as we know it” before adding: “As a consequence of that, a disruption to the level of economic activity, higher prices for a period of time.

“Our job at the Bank of England is to make sure those issues don’t happen in the financial system so that people will have things to worry about in a no-deal Brexit, which is still a relatively unlikely possibility but it is a possibility, but what we don’t want to have is people worrying about their money in the bank, whether or not they can get a loan from the bank... and we have put the banks through the wringer well in advance of this to make sure they have the capital.”