Hard Brexit will bring real economic shock and we’ll just be a sideshow, warns Bank chief
BANK of England governor Mark Carney warned of a “real economic shock” if Britain tips out of the European Union without a withdrawal deal.
Speaking to a Commons committee, he said the type of disruption would be so wide-ranging that the Bank would be just a “sideshow”.
“This is not the financial crisis, round two,” Mr Carney told the Treasury Select Committee, explaining why the Bank’s role would be less central to repairing the damage.
“This is a real economic shock. Central banks have a role but we are more of a sideshow.” Mr Carney said a longer transition period may be needed.
The Bank announced it is bringing forward an analysis on what Theresa May’s withdrawal deal would mean for the financial sector compared with no- deal, so that MPs will see it ahead of the Commons vote.
Michael Saunders, who sits on the Bank’s Monetary Policy Committee, told the committee that companies may slam the brakes on hiring workers if there is “no deal” and that there could be a hit to investment in Britain.
In written evidence to the committee, he warned of “weaker business confidence and higher uncertainty, hitting investment and hiring”.
The Bank spoke out as the Cabinet met to consider how to pass Theresa May’s much criticised withdrawal deal for the first time since last week’s emergency reshuffle caused by the resignations of Dominic Raab and Esther McVey. In key developments:
Mrs May’s 10 DUP allies threatened “political consequences” if the deal goes ahead, apparently hinting they could end the confidence and supply deal that has propped up the Government since Mrs May lost her majority in June 2017. The party fired a warning short by rebelling on Finance Bill amendments last night.
Bosses’ group the Institute of Directors said a survey found three quarters of its members thought it “extremely important” for a withdrawal deal to get through Parliament to avoid worse uncertainty. Allie Renison said their survey found business rated a withdrawal deal higher than holding a second referendum.