2 August 2019 | UK NEWS
The Governor of the Bank of England, Mark Carney, has issued renewed warnings about the anticipated economic impact of a No Deal Brexit today, in comments made on the Today programme earlier today. Citing increased prices for motorists and consumers across the country, Mr Carney also voiced concern about the continued profitability of a “substantial number” of UK firms.
Mr Carney was responding to further optimistic overtures around Brexit emanating from the new team in Downing Street, as well as to the leak of a Government presentation slide said to have been prepared in the final few weeks of former Prime Minister Theresa May’s administration, which was classified ‘OFFICIAL-SENSITIVE’ and obtained by Sky News. The document outlined the potential ‘worst-case’ scenarios in the categories of First Day, First Fortnight and First Month.
Describing the potential ramifications of these scenarios, Mr Carney said: “The economics of no-deal are that the rules of the game for trade – exporting to Europe or importing from Europe – fundamentally change.
There are some very big industries in this country where that which is highly profitable becomes not profitable, becomes uneconomic, and very difficult decisions will need to be taken. That has knock-on effects on the economy in the short term.”
Adding that the economic shock would be “instantaneous”, he further told Today: “One would expect prices to go up. It’s reasonable to expect, the markets are absolutely clear on this, that in the event of no-deal the exchange rate would go down for a period of time. And the area of the economy where that instantly translates into prices – it’s at the forecourt of the petrol station and in fruit and veg.”
Wolves understands that the document in question was shown to Ministers at the time, but had not yet been ‘signed off’ as official Government policy. It warns of potential friction between UK and EU fishing vessels at sea, and suggests that cross-border agricultural trade along the NI/RoI border could “virtually stop”, while other trade may slow.
It further predicts, under the category of First Fortnight, that there could be “potential consumer panic and food shortages, even in areas which are not directly affected at the border.” There may also be a “possible increased risk of serious organised crime including people smuggling and illegal migration”. Within the First Month, it anticipates an “unsustainable” situation for heightened policing resources, with problems growing as operational security gaps “continue to emerge”.
Mr Carney’s comments earlier today came amid reports from north of the border that the Scottish Government is also preparing to ramp up its efforts to mitigate a No Deal Brexit. Warning that the Scottish economy would be “seriously damaged” as a result, which would “inevitably cause disruption”, First Minister Nicola Sturgeon said: “In its first week, the UK Government has shown it is willing to risk a No Deal Brexit. Taking Scotland out of the EU in any way is deeply undemocratic but the Prime Minister’s refusal to engage with the EU has dramatically increased the prospect that we will face a deeply damaging No Deal Brexit.”
She added: “If the Prime Minister continues with this approach, Scottish jobs will be lost and our economy seriously damaged, and it will be entirely the UK Government’s responsibility. Having assessed the actions of the new UK Government our work to prepare for No Deal will intensify in the coming weeks and months.
But even with the best possible preparations, leaving the EU without a deal will hurt Scotland’s businesses, disrupt trade and impact on all aspects of society. There is simply no way to mitigate every impact that no deal will have, no matter how hard we try.”
Ms Sturgeon further highlighted her commitment to a second referendum on Scottish independence, adding: “The willingness of the UK Government to pursue this approach, against all the evidence, shows why we must continue to make preparations for a referendum that will give people the right to decide Scotland’s future instead of being dragged out of the EU against their will.”
The First Minister’s comments came following a meeting of the Scottish Cabinet earlier today, in which it resolved to step up its preparations for a No Deal Brexit, having concluded that Prime Minister Boris Johnson’s refusal to re-open negotiations with the EU for as long as it fails to countenance any further alterations to the existing Withdrawal Agreement will only make a No Deal Brexit ever more likely.
Elsewhere on the UK political scene today, we read in the London Evening Standard that the veteran ex-Labour MP Frank Field, currently sitting as an independent in Parliament, has announced that he will stand for his own Birkenhead Social Justice Party in the next General Election, ruling out standing again for Labour while “anti-Semitism” and “nastiness” continue within its ranks.
Meanwhile, US President Donald Trump has reportedly discussed trade and security with Prime Minister Boris Johnson in a phone call yesterday, according to The Guardian. Mr Trump is also said to have urged Mr Johnson not to use technology from Chinese tech giant Huawei in any of its 5G mobile networks – a stance that the US is keen to push with all its allies.
