Bank of England governor Mark Carney is set to extend his term at the helm to ensure a ‘smooth’ Brexit, as pressure mounts on Theresa May’s administration to ramp up preparations for leaving the EU.
Speaking to the Treasury Committee on Tuesday (4 September), Carney, the governor of the Bank of England, said he was ready to prolong his tenure as governor “to promote a smooth Brexit and an effective transition at the Bank”.
Carney is due to step down from the role in June 2019 but is now expected to stay on until June 2020, with the backing of Theresa May. His repeated warnings that leaving the EU will deliver a sizeable hit to the UK economy have made him an unpopular figure with some Brexiteers, who accuse him of being part of the ‘Project Fear’ campaign led by David Cameron and George Osborne in the run-up to the June 2016 referendum.
Carney added that a ‘no deal’ Brexit, with the UK trading under WTO terms with the EU, would put family finances under further pressure, commenting that “it is likely, given the pace of wage growth and the inflation effects, that the real income squeeze will return for households for a few years,”
Meanwhile, Andy Haldane, the Bank’s chief economist, told MPs on the committee that businesses estimated there was now a one-in-four chance of a no deal Brexit, compared with one-in-five a year ago. Haldane also warned that food prices would rise in the event of a ‘no deal’ Brexit “because of a weaker pound and higher tariffs”.
UK MPs returned to work on Monday for three weeks of parliamentary sessions before the autumn party conference season, which runs until early October. That puts added pressure on lawmakers to put in place up to 1,000 pieces of secondary law before the UK formally leaves the EU next March.
On Tuesday, Philip Rycroft, the head civil servants at the Department for Exiting the EU, told MPs there was “a very big body of work” to do to make sure the statute book was “competent” at the point of exit, adding that around 800 pieces of legislation will have to be passed before February.
Although Brexit Secretary Dominic Raab has insisted that a deal on a UK withdrawal agreement is more likely than not, both the EU and UK have stepped up the contingency planning for a ‘no deal’.
Carney’s predecessor Mervyn King on Wednesday (5 September) accused Theresa May’s government of ‘incompetence’ in its handling of preparations for Brexit, after ministers were forced to confirm that they were taking steps to stockpile medicines and guarantee short-term food supply in the event of talks with the EU collapsing.
“Frankly, if a government cannot take action to prevent some of these catastrophic outcomes, whatever position you take on the EU, it illustrates a whole lack of preparation,” said King, who has previously signalled his support for Britain’s EU exit.
“It doesn’t tell us anything about whether the policy of staying in the EU is good or bad, it tells us everything about the incompetence of the preparation for it,” he added.