BREAKING No Deal Brexit set to raise food and petrol prices and 'incomes will be lower'; Mark Carney, the Bank of England governor, said his warning is "straight economics" adding: "It may take a while to get to the sunlit uplands".
Byline: Dan Bloom
No Deal Brexit is set to raise food and petrol prices and leave incomes lower in the UK, the Bank of England Governor has said.
Mark Carney doubled down on his warning yesterday that crashing out of the EU could send the pound plunging even further.
Sterling is at already two-and-a-half-year lows - and today Mr Carney outlined how that would affect everyday goods.
He told BBC Radio 4's Today prohramme: "One would expect prices to go up.
"It is reasonable to expect, the markets are absolutely clear on this, that in the event of No Deal, the exchange rate would go down for a period of time.
"The area of the economy where that instantly translates into prices is on the forecourt of the petrol station, and in fruit and veg."
Mr Carney, who ends his term as Bank governor in January, has been repeatedly attacked for his 'Project Fear' warnings by Leavers including Tory ministerJacob Rees-Mogg.
But asked if he was a "glumbucket" he said: "This is straight economics. This is very straightforward."
He said 90 days before theBrexitdeadline, the government must "recognise" the challenges of crashing out without a deal.
"The challenge particularly in food is it's perishable, so you can't stockpile today for demand in November, and it is heavily heavily dependant on ports being open," he said.
He added: "The exchange rate adjusts to what is a real economic shock if the change in trading relationship means that real incomes will be lower here, relative to what they would otherwise have been, for a period of time.
"That's not a comment about the longer term - it may take a while to get to the sunlit uplands...
"During this period of adjustment the exchange rate going down helps with adjustment. But it does have the consequence that things like food, petrol, other day to day items are more expensive."
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A "substantial number" of firms would find they were no longer competitive as a result of a sudden shift to World Trade Organisation rules on October 31, he warned.
The Bank of England Governor added: "The economics of no-deal are that the rules of the game for trade - exporting to Europe or importing from Europe - fundamentally change.
"There are some very big industries in this country where that which is highly profitable becomes not profitable, becomes uneconomic, and very difficult decisions will need to be taken.
"That has knock-on effects on the economy in the short term."
Credit: South Wales Echo
Credit: WPA Pool
LONDON, ENGLAND - JUNE 20: Governor of the Bank of England Mark Carney delivers a speech during the annual Mansion House dinner on June 20, 2019, in London, England. Greenpeace volunteers wearing red evening dress with sashes reading "climate emergency" gatecrashed and disrupted the beginning of Chancellor Philip Hammond's Mansion House speech. (Simon Dawson - WPA Pool/Getty Images)
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|Publication:||Daily Mirror (London, England)|
|Date:||Aug 2, 2019|
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