Carney hints at a No Deal rates cut

... but he warns that sealing a new EU deal is still ‘very hard’

THE governor of the Bank of England hinted last night that interest rates could be slashed if Britain leaves the EU without a trade deal.

Speaking at the annual gathering of central bankers in the US, Mark Carney said: ‘In the event of a No Deal, no transition Brexit, sterling would probably fall, pushing up inflation, and demand would weaken further.’

The Bank of England’s rate-setting Monetary Policy Committee would then have to assess how demand from consumers, supply from overseas businesses and the exchange rate affect trading conditions and the functioning of the economy.

Mr Carney, who is stepping down from his role at the Bank of England in January, told the gathering in Jackson Hole, Wyoming: ‘In my view, the appropriate policy path would be more likely to ease than not.’

An interest rate cut would help millions of mortgage borrowers by reducing their repayments.

But it would hit savers, most of whom are stuck with below-inflation returns.

BORIS Johnson has vowed to prove wrong those who ‘think Britain’s best days are behind us’ as he prepares to make his debut on the world stage today.

The Prime Minister will use the G7 summit in Biarritz to heap pressure on the EU chief Donald Tusk to re-open Brexit talks on the Irish backstop.

Mr Johnson last night warned that getting a deal will ‘not be easy’ and people should not ‘get their hopes up too soon’.

But he said the ‘mood music’ from Angela Merkel and Emmanuel Macron this week on his visits to Berlin and Paris was ‘very good’.

In a briefing ahead of the gathering, Mr Johnson said his message to his fellow G7 leaders would be that ‘the Britain I lead will be an international, outward-looking, self-confident nation’.

He pledged the country will remain ‘an energetic partner’ that ‘never flinches’ from its responsibilities on the world stage. ‘Some people question the democratic decision this country has made, fearing that we will retreat from the world,’ he added.

‘Some think Britain’s best days are behind us. To those people I say: you are gravely mistaken.’

The Prime Minister will hold a one-on-one meeting with Mr Tusk, the European Council president, tomorrow lunchtime when he will seek to build on assurances from Mrs Merkel and Mr Macron that they are willing to look at possible changes to the Brexit deal.

Mr Johnson last night said the two leaders could ‘see that we want a deal’ and ‘can see the problems with the backstop’.

But he added: ‘I want to caution everybody, OK? Because this is not going to be a cinch, this is not going to be easy. We will have to work very hard to get this thing done. To persuade our EU friends and partners, who are very, very, very hard over against it, will take some time.’

It was ‘always on the steps of the court, as it were, that the deal is done’, he said, adding: ‘I must urge people – we are going to be working very hard on this but they shouldn’t necessarily get their hopes up too soon.’

It is understood that in their meeting this week, Mrs Merkel told Mr Johnson that she doesn’t believe it will be decided whether there is a deal or not until the last moment of the European Council summit on October 17 and 18.

Meanwhile, the Government yesterday confirmed that it will not appoint a European Commissioner for when the new Commission takes office on November 1 to show it is serious about leaving on October 31 come what may. Under EU law, all member states are required to nominate a Commissioner. By not appointing one it creates a block on getting a further Brexit extension. Brexit Secretary Stephen Barclay said: ‘We are leaving the EU on 31 October.

‘As a departing member state we will not be involved in the new Commission so it would be a distraction to nominate a new Commissioner.

‘This is part of the UK’s ongoing preparations for Brexit which allows us to focus on our future relationship with the EU while continuing to explore new opportunities with partners across the world.’ Tory rebels are thought to be planning to hold their own talks with the EU as part of their plans to block a No Deal Brexit.

Some have suggested former ministers such as Philip Hammond could use their contacts to urge Brussels to grant a further extension if a deal has not been passed by MPs. A spokesman for Mr Hammond last night said they had nothing to say on the matter.

THE chic French seaside resort of Biarritz was once the playground of the English upper classes, who flocked to its famed casino to try their luck.

This weekend at the G7 summit, another British gambler is in town. And the stakes he’s playing for couldn’t be higher.

That gambler is Boris Johnson and his calculated bet is that in the face of a potentially devastating No Deal Brexit, the EU will finally see reason and agree to scrap the Northern Irish backstop. If it does, an orderly departure is still within reach. If not, we dive into the unknown together.

The Prime Minister will use the summit to make clear he isn’t bluffing and that, although Britain doesn’t want No Deal, we are prepared for it.

He’s already had a good week. On visits to Berlin and Paris he used his considerable charm to send the message that no progress can be made unless the backstop goes.

It would be an exaggeration to say Angela Merkel and Emmanuel Macron were putty in his hands. But they gave him a conspicuously warm reception and hinted that a new agreement was at least possible.

Unlike the commissars of Brussels, these leaders have voters to answer to. And those voters are nervous. One recent forecast suggested No Deal could cost 141,000 jobs in France and 291,000 in Germany.

With catastrophe looming on that scale, Mrs Merkel and Mr Macron would be foolish not to look for alternatives. As one Tory MP put it: ‘We saw a can-do attitude, a body language, a new rapport developing.’

We shouldn’t be too wide-eyed, of course. There is still huge resistance in Brussels to altering the backstop, and any reopening of the agreement requires the consent of all 27 member states.

Many diehards cling to the hope that a Remainer alliance in the Commons, including recalcitrant Tory rebels, could yet bring Mr Johnson crashing down.

But Germany and France are the giants of the EU – and also its paymasters. Bringing them onside would be a major leap forward.

In Biarritz tomorrow, Mr Johnson will seek to put pressure on Donald Tusk to come to the party. He has previously described the European Council president (with his usual mastery of understatement) as ‘a bit negative’. But, as ever, bouncing Boris remains optimistic that he can prevail.

This week’s defining picture was of him returning to Downing Street and apparently punching the air in triumph at how well his Franco-German sojourn had gone.

His celebrations may have been premature, but the contrast between his demeanour and that of Theresa May, who usually came back from European negotiations immersed in a cloud of gloom, was marked.

Mr Johnson’s gamble may or may not pay off. But at least there’s a sense that someone is at last injecting some muchneeded urgency into the previously moribund Brexit debate.