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Financial News: BoE's Carney Warns No-Deal Brexit Will Make UK

BoE's Carney Warns No-Deal Brexit Will Make UK Industries Uneconomic

08/02/2019 - 08:07:00 (RTTNews)

(RTTNews) - Bank of England Governor Mark Carney said a no-deal Brexit would make highly profitable UK industries uneconomic and can give an instantaneous shock to the economy.

In an interview to BBC Radio, aired on Friday, Carney said the economics of no-deal are that the rules of the game for exporting to Europe or importing from Europe fundamentally change.

"Instantly, you have supply disruptions but you actually have businesses that are no longer economic," he told BBC.

He added that no deal Brexit would be inflationary.

This would make some very big and highly profitable industries "uneconomic," he added.

Cars, chemical and food manufactures would be hardest hit. "These are the sectors that have not been investing," Carney said.

"One of the reasons why the economy has slowed is that business investment has been very, very weak," he pointed out.

On Thursday, the Bank of England downgraded its growth outlook for this year to 1.3 percent from 1.5 percent if the UK exits the EU with a deal. The bank warned of a one-in-three chance of a UK recession even in a smooth Brexit scenario.

The BoE chief told the BBC there was a "significant possibility" that UK leaves the Europe without a deal.

At the monetary policy meeting, BoE policymakers reiterated that the response to Brexit, whatever form it takes, will not be automatic and could be in either direction.

"We will do everything we can in order to provide support to the economy," Carney told BBC.

In the event of no-deal Brexit, the pound will fall and Britons would need to pay more for food and petrol, he said.

The value of pound would fall which Carney described as a real economic shock.

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