Brexit: UK economy not ready for no deal, Mark Carney says

Large parts of the British economy are not ready for a no-deal Brexit, Bank of England governor Mark Carney has said.

Fewer than half of businesses have initiated contingency plans, Mr Carney told BBC Radio 4’s Today programme.

He said the UK would need a transition period to adapt to whatever form of departure from the EU Parliament chose.

He also denied that the Bank’s warning no-deal could lead to a UK recession was intended to scare people into backing his favoured form of Brexit.

Ports and borders

Mr Carney told the BBC that “we know from our contacts with business, others know from their contacts, that less than half the businesses in the country have initiated their contingency plans for a no-deal Brexit”.

“All the industries, all the infrastructure of the country, are they all ready at this point in time? And, as best as we can tell, the answer is no,” Mr Carney said.

It is in the interests of the country that there should be a transition to whatever new relationship the UK has with the EU, he said.

He added: “We know issues around the borders, we go to the ports and we know the issues that are there today. So we need some time to get ready for it.”

MPs warned on Wednesday that there was a “real prospect” of “major disruption” at UK ports in the case of a no-deal Brexit, with government plans “worryingly under-developed”.

However, the Department for Transport said the Public Accounts Committee’s conclusions “were not accurate”.

Brexit no-win

Mr Carney’s comments come after government forecasts warned that the UK would be economically poorer under any form of Brexit, compared with staying in the EU.

Under Theresa May’s Chequers Brexit plan, the UK economy could be up to 3.9% smaller after 15 years compared with staying in the EU, government analysis suggested.

With a no-deal Brexit, the hit to the economy would be 9.3%.

“Our deal is the best deal available for jobs and our economy, that allows us to honour the referendum and realise the opportunities of Brexit,” Mrs May said at Prime Minister’s Questions.

The Bank of England, meanwhile, said on Wednesday that the UK economy could shrink by 8% in the immediate aftermath if there was no transition period, house prices could fall by almost a third, and that the pound could fall by a quarter.

Conservative MP and Brexiter Jacob Rees-Mogg accused Mark Carney of talking down the pound on Wednesday, saying the Bank of England’s warnings tonight “lack all credibility”.

Mr Rees-Mogg said “project fear” had become “project hysteria”.