(1 Aug 2019) The governor of the Bank of England said a no deal Brexit "would be an instantaneous shock not just to demand but to supply." Mark Carney said the degree to which that happened would be partly influenced by no deal preparations "but not totally eliminated because the fundamental economic relationship has changed."
Brexit uncertainties are becoming "more entrenched" and increasingly weighing on the British economy less than three months before the country is scheduled to leave the European Union, the Bank of England said Thursday.
The bank's nine monetary policymakers unanimously decided to keep the bank's main interest rate on hold at 0.75% and said heightened fears about the possibility of a disorderly and disruptive no-deal Brexit were hobbling growth and likely to keep business investment in check over the coming months.
Carney said the financial system was ready for Brexit but a no deal situation was one in which "sterling was likely to be lower, inflation was likely to be higher for a period of time and the economy is likely to slow."
The governor added that the bank would "do what we can to support jobs and activity but there are limits to what we can do."
Carney said that Brexit would feed into global trade uncertainties, adding that it would have effects beyond the GDP of the UK economy.
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