Bank of England Governor Mark Carney said on Friday that some major industries could become unviable if Britain leaves the European Union without striking a deal with the bloc, adding that this was now a real prospect.
New Prime Minister Boris Johnson says he will take Britain out of the EU on Oct. 31 – regardless of whether he gets a transition deal to keep trade running smoothly – prompting markets to price in a higher risk of a disorderly Brexit.
Speaking a day after the BoE cut its growth forecasts for Britain’s economy, Carney said he shared a view among the government and public that a no-deal Brexit was now a “significant possibility”.
“The economics of no-deal are that the rules of the game for exporting to Europe or importing from Europe fundamentally change,” Carney said in an interview with BBC News.
“And there are some very big industries in this country where that which is highly profitable becomes not profitable, becomes uneconomic,” Carney said in an interview with BBC radio.
He said the automotive, transport, food and chemical sectors would face the biggest challenges in the event of a no-deal Brexit.
Economists polled by Reuters on average see a one-in-three chance that Britain departs the EU without a deal in place to smooth that transition.
Supporters of Brexit say Carney is overly pessimistic about Britain’s future outside the European Union.
Former Conservative Party leader Iain Duncan Smith said he was “one of the architects and promoters of Project Fear” in comments published in the Daily Telegraph on Friday – a charge Carney denied.
“It … is not helpful to deny that shifting from the most integrated economic relationship in the world, which is being a member of the European Union, to a new relationship that is potentially just WTO relationship … that that would not have an effect on the economy,” Carney said.