The Governor of the Bank of England, Mark Carney, has told MPs that Brexit is no longer the main threat to the UK financial system and that its risk to the UK economy in general has declined.
Speaking to the Treasury Select Committee (TSC), Mr Carney admitted that the economy was growing more strongly after the referendum than he or the rest of the Monetary Policy Committee (MPC) had predicted, but claimed that the Bank’s own actions had mitigated against problems.
Asked by TSC chairman, Andrew Tyrie MP, if Brexit remains the biggest domestic risk to the financial system, as he had warned before the vote, Mr Carney said: ‘Strictly speaking, the view of the Committee is no.
‘In the run up to the referendum, we felt it was the largest risk because there were things that could have happened which had financial stability implications. Actions were taken to mitigate that, but having got through the day after, the scale of the immediate risks has gone down.’
Mr Carney also suggested that the risks associated with the post-departure transition were now greater for the rest of Europe than for the UK, but also called for a ‘transitional deal’ to help reduce volatility as Britain exits the EU.
Meanwhile, a series of reports and indicators suggest that the UK economy is strengthening. Industrial production rose by 2.1% in November compared with October, and manufacturing output increased by 1.3% month-on-month in November.
The FTSE 100 index recently hit an unprecedented high and set a new ‘winning streak’ record by closing higher for 12 consecutive trading days, while several major retailers, including Sainsbury’s, Tesco and Marks and Spencer, announced stronger-than-expected results from the pre-Christmas trading period.