There is no way the UK can prepare for a no deal Brexit, and growth is “guaranteed” to fall if the country crashes out of the EU, the governor of the Bank of England (BoE) told MPs yesterday (February 26).
Mark Carney made the statements on the same day as Unite representatives warned that the Tories’ hard Brexit tactics are destroying the UK’s world-class manufacturing base.
Carney told the Treasury Select Committee that there is not enough warehouse space for UK manufacturers to stockpile goods in the event of no deal and that economic growth would be “guaranteed” to decline.
The BoE reduced its growth forecast for 2019 to 1.2 per cent earlier this month – down from November’s forecast of 1.7 per cent – but Carney made clear a no deal Brexit would result in a further downgrade.
He said, “If I come back (to the committee) in May and there’s no deal and no transition, I guarantee that the path of GDP in our forecast will be materially lower than our February forecast.
“And that is absolutely the view of businesses up and down the country.”
Carney also told MPs that manufacturers do not have adequate warehouse space to stockpile the supplies necessary to weather a no deal exit.
He added that the BoE would probably have to provide support for the economy under a no deal Brexit but admitted that there were few options available to do so.
BoE deputy governor Sir Dave Ramsden told the committee Brexit uncertainty had caused a dramatic fall in investment over the past year and that this was expected to continue.
Ramsden said, “That’s incredibly unusual at a time when the economy is growing – it’s out of line with what has happened historically and out of line with our main economic partners.”
Unite general secretary Len McCluskey said the union’s members are at the sharp end of the fall in business confidence described by Ramsden.
“(Our convenors) are saying loud and clear that the Tories’ mishandling of Brexit is already being felt in the winding down of operations and the refusal of businesses to commit to future investment,” McCluskey said.
“They see the prime minister running down the clock in order to give her deal a chance of making it through parliament, saving her job in the short-term but imperilling hundreds of thousands of others.”
Calling for no deal to “come off the table now”, McCluskey said ministers and MPs seeking to prevent a hard Brexit must have “the courage of their convictions and step up”.
He added, “We desperately need a customs union to preserve our enduring trading arrangements and I urge Mrs May to reconsider her red line on that issue.
“MPs should this week seize the chance offered by Labour’s proposals to honour the referendum result by leaving on terms that protect our economic interests and jobs.
“They should back Jeremy Corbyn’s plan and bring the uncertainty to an end.”