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Fri, 10 July 2020

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Bank of England governor Mark Carney dismisses Boris Johnson no-deal Brexit trade claims

Bank of England governor Mark Carney dismisses Boris Johnson no-deal Brexit trade claims
3 min read

Boris Johnson's claims UK trade would continue unchanged after a no-deal Brexit have been dismissed by Bank of England governor Mark Carney.

He contradicted suggestions from the Tory leadership frontrunner, who said tariffs would not be put in place even in the event of us leaving the bloc with no agreement in place.

Earlier this week Mr Johnson cited a provision under world trade organisation rules, known as GATT 24, which would permit this to happen, but speaking to the BBC Mr Carney said this could only be used between parties who already had a trade deal in place or were close to striking one.

"GATT 24 applies if you have an agreement, not if you've decide to not have an agreement or have been unable to come to an agreement," he said.

"So, if we don't have an agreement, we should be clear, that not having an agreement with the European Union means that there are tarrifs...automatically, because the Europeans have to apply the same rules to us as they apply to everyone else. 

"If they were to decide not to put in place tarriffs, they also have to lower tarriffs with the United States, with Canada, with the rest of the world. The same would hold for us. The UK would have to make a decision on what to do there." 

The comments are likely to draw fury from Brexit supporting MPs who have previously accused the central bank governor of promoting so-called "project fear" for raising concerns about the negative economic impact of Brexit.

But Mr Carney urged both Mr Johnson and fellow Conservative leadership hopeful Jeremy Hunt to provide "absolute clarity" on what a no-deal exit would mean for exporters.

Both of the final two in the race to replace Theresa May have vowed to take the UK out of the bloc without a deal unless European leaders agree to a new Brexit agreement.

"We should be clear that no-deal means that situation", Mr Carney said. "It means a bigger adjustment. That is why the desirable, it may be the choice that the country takes, it may be that we move to so-called WTO standards. 

"But whether we move to WTO, whether we move to so-called 'Canada-style' free trade agreement or some deeper partnership, it is always advisable, indeed it is always the case, I'm hard pressed to think of a case in the last 25-years plus globally where a new trading arrangement has been struck and its happened overnight."

He added: "We should be clear, that if we move to no-deal, no-deal means no-deal, there is a substantial change to the trading relationship with the European Union. Now that may be the choice the country takes, but it should be a choice that is taken under absolute clarity under what that means.

"We should make an informed choice."

Meanwhile, Mr Carney warned that 150,000 UK businesses had failed to complete the paperwork required to continue exporting goods to the EU in the event of a no-deal Brexit.

And he warned that business who had stockpiled were still likely to have a "very short-term level of preparation".

“For example, in the auto sector it’s extremely difficult to build up sufficient stocks to run the plant so business will be reliant on what the governments are able to do in order to keep the ports open, the trade flowing," he said.