Bank of England braced for ‘disorderly Brexit,’ says Mark Carney

Posted On: 
25th May 2018

The Bank of England is ready to step in to prevent an economic slump if Britain is plunged into a “disorderly Brexit,” Mark Carney has said.

Bank of England governor Mark Carney gave a speeach to the Society of Professional Economists in London last night
Credit: 
PA

Speaking at an event yesterday, the bank’s governor said he would be prepared to cut interest rates or halt planned rises in order to offset any negative effects of leaving the EU.

Mr Carney also warned that as Britain adopted new trading arrangements with the bloc, weaker income growth would probably "accompany that adjustment".

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The intervention comes after a new report suggested that Theresa May may have to extend the Brexit transition period to establish new customs arrangements.

According to the Exiting the European Union Committee, the UK may be forced to stay in a customs union with the EU beyond 2020 because of the “highly unsatisfactory” lack of progress made on the issue so far.

This follows the Government's admission that EU Withdrawal Bill won’t return to the Commons for at least another fortnight, following a bruising 15 defeats in the Lords.

The Bank of England Governor has previously warned of the negative impact Brexit uncertainty could have on the UK economy.

And in a key speech to the Society of Professional Economists in London he signalled his intention to respond to any negative consequences in “whatever form it takes”.

Mr Carney indicated that this could include lowering interest rates even if that meant the bank deviating from its 2% inflation target.  

He said: “Observers know from our track record that, in exceptional circumstances, we are willing to tolerate some deviation of inflation from target for a limited period of time.”

“We have the tools we need,” he added. “We will be prudent, not passive.

“We will respond to any change in the outlook in these exceptional circumstances to bring inflation sustainably back to target while supporting jobs and activity, consistent with our remit.”