Last chance for Bank of England governor to warn public of no-deal Brexit

Following the Bank of England's August Inflation Report, Governor Mark Carney said the interest-rate setting panel would update lawmakers when Parliament reconvenes in September.
Following the Bank of England's August Inflation Report, Governor Mark Carney said the interest-rate setting panel would update lawmakers when Parliament reconvenes in September.PHOTO: REUTERS

LONDON (BLOOMBERG) - Bank of England Governor Mark Carney is running out of opportunities to warn lawmakers just how much a no-deal Brexit will harm the economy.

With Parliament set to be suspended next week, Carney's appearance before the Treasury Committee on Wednesday (Sept 4) could be one of his last chances to publicly address MPs before the UK leaves the European Union on Oct 31. The session may also give the BOE the opportunity to fulfil the Committee's request for updated Brexit assumptions, which were first released last year.

The stakes have been raised by Prime Minister Boris Johnson's new government, which has stepped up planning for no deal and moved against rebel lawmakers planning to prevent the UK leaving the EU without a transition period. Johnson went even further on Monday, signalling he will try to trigger a snap election on Oct 14 if he loses a crunch vote in Parliament on Tuesday evening.

While the BOE has published its views on worst-case scenarios, it does not include the possibility of a no-deal in its official forecasts until that becomes the government's stated policy. That means any projections this week would be the closest officials have come to detailing the specific shock of leaving without new trade arrangements in place.

In the most extreme no-deal scenario, which officials stressed was not an outright projection, the BOE saw the economy shrinking by 8 per cent within a year and property prices plunging almost a third.

Following the BOE's August Inflation Report, Carney said the interest-rate setting panel would update lawmakers when Parliament reconvenes in September.

The Treasury Committee itself is also in a period of flux, after previous chair Nicky Morgan took up a cabinet role. In the absence of an elected replacement, members of the Treasury Committee will meet on Sept 3 to choose a chair for the meetings.

 
 

On Wednesday, Carney will testify first alongside his colleagues Andy Haldane, Jonathan Haskel and Gertjan Vlieghe, on the bank's August Inflation Report. He will then appear alone to discuss the UK's economic relationship with the European Union.

The session will come the same day that UK Chancellor of the Exchequer Sajid Javid is due to announce a one-year spending review, in which he is expected to allocate extra money for policing, health and education.