LONDON (Reuters) - Bank of England Governor Mark Carney said on Tuesday Britain should be under no illusions about the likely shock to its economy if it leaves the European Union next month without a transition deal to ease the shock.
The United Kingdom is on course to leave the European Union on March 29 without a deal unless Prime Minister Theresa May can convince the bloc to amend the deal she agreed in November and then sell it to skeptical British lawmakers.
“You have got to recognize this could go quite badly. We are 45 days before the possibility of it,” Carney said, answering audience questions after a speech at a Financial Times event.
“We shouldn’t be under any illusions — I’m not going to put a point estimate on it — but a no-deal, no-transition Brexit would be an economic shock for this economy.”
A no-deal Brexit would “certainly” deliver a hit in the short term to Britain’s economy, Carney said, adding that a weaker currency would not solve its problems.
Asked by a Brexit-supporting lawmaker about the possibility of a weaker pound helping to absorb the no-deal Brexit economic shock, Carney said: “That’s part of the necessary adjustment mechanism but it is not a step to prosperity, it is a hit to income.”
Carney, a Canadian, has previously warned of the risks that Brexit poses to the United Kingdom, the world’s fifth-biggest economy, earning him the ire of some anti-EU lawmakers.
Last year, the BoE said a worst-case scenario...