According to the governor of the British central bank, it is worrying and extremely unpleasant, but it also has the risk that Britain’s membership in the European Union will be terminated without agreement.
Mark Carney on BBC’s Radio Today’s Friday program, however, considered “relatively unlikely” that no agreement was reached but he had the opportunity to do so. He also stressed that the United Kingdom and the European Union had “an absolute interest” to have a transitional period after the expected end of British membership in March 2019.
He also talked about the financial system being solid and resistant to shocks. “We have made sure that banks have the capital they need and the liquidity they need,” he added.
He noted, however, that the Brexit process has a number of possible outcomes, and negotiations are now critical. If no agreement was reached between Britain and the European Union, it would lead to disturbances in trade and economic activity, and prices would rise for some time – he warned. The task of Bank of England is to not do this, “he said. He also said that he was counting on the risks of an unplanned Brexit.
There are, however, some “things” on the part of the European Union that need to be resolved, despite their liquidity and capital, British banks can not overcome all the financial problems of Brexel alone, he pointed out. On the British side, all regulations are fine, but the European side still has to do this in this area – he explained.
The British central bank has raised interest rates on Thursday, raising its benchmark from 0.5 per cent to the highest level since March 2009, to 0.75 per cent. Mark Carney, on the basis of the current economic situation, described the market expectations as broadly standard by raising the base rate to 1.5 percent in the next three years.