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Bank of England's Carney hits back at critics of Brexit scenarios

Reuters  |  LONDON 

By David and Jones

LONDON (Reuters) - of England defended the central bank's warnings of a potentially major economic hit from Brexit which angered lawmakers opposed to Theresa May's plans for leaving the

The BoE said last week that under a worst-case exit from the European Union, Britain could suffer greater damage to its economy than during the global financial crisis.

Carney told lawmakers on Tuesday that the scenarios set out by the BoE were based on detailed preparatory work to ensure banks and other lenders were ready for Brexit, and were not off-the-cuff forecasts.

"There's no exam crisis. We didn't just stay up all night and write a letter to the Treasury Committee," Carney said at a committee hearing in parliament. "You asked for something that we had, and we brought it, and we gave it to you."

Less than four months before Brexit, it remains unclear whether Britain will leave the EU with a transition deal to smooth the shock for the economy.

May agreed a plan with EU leaders last month but it faces deep opposition in parliament including from within May's own The plan faces a key vote on Dec. 11.

Pro-Brexit critics of Carney, who have long accused him of political meddling in the debate about Britain's relationship with the EU, dismissed last week's BoE report as scare-mongering.

Former BoE Mervyn joined the criticism on Tuesday when he lamented the central bank's involvement in what he said was an attempt to frighten the country about Brexit.

"It saddens me to see the of England unnecessarily drawn into this project," said in an article published on

BREXIT SHOCKS

Carney stressed the worst-case scenarios were "low-probability events in the context of Brexit" which the central needed to consider to make sure Britain's system could withstand any Brexit shocks.

"We're already sleeping soundly at night, because we have the financial sector, the core of the financial sector, in a position that it needs to be for a tough scenario."

But he told lawmakers that the price of could go up by 10 percent if Britain left the EU with no deal and no mitigating arrangements to avoid chaos at the country's ports.

He said Britain's ports were not ready for even a managed shift to rules for the country's exports and imports with the EU.

"Don't assert what is not correct," he snapped at one lawmaker who said the BoE had not considered the possibility of substituting trade with the EU for other markets.

Carney reiterated his opposition to ceding decision-making over rules for the sector to the EU after Brexit, given the scale of Britain's financial services sector.

"We would not be comfortable...outsourcing supervision of this incredibly complex, incredibly important financial sector," he said.

Deputy said a Norway-style Brexit -- in which Britain would stay in the EU's single market and follow the bloc's rules without any say on them -- was undesirable given Britain's was 20 times the size of Norway's.

Some lawmakers have suggested a Norway-style Brexit could be a for Britain as it struggles to find a way to strike a new long-term relationship with the EU.

(Additional reporting by Sarah Young, and Amy O'Brien,; Writing by William Schomberg, editing by Ed Osmond)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, December 04 2018. 16:34 IST
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