Bank of England says Brexit no longer biggest economic risk

The Governor of the Bank of England, Mark Carney, has told MPs that economic risks to the UK stemming from Brexit have receded.

Mr Carney said that Bank’s actions before and after the EU referendum in June had played a key role in helping to avert an economic crisis and could be an underlying reason why it may upgrade its forecasts in its report published next month.

The Governor said that Brexit was no longer the biggest threat to the UK’s economy and posed a greater risk to the remaining EU member states.

He told the Treasury Select Committee of MPs: “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 said that Bank of England’s predictions on Brexit, which have come under heavy criticism following the better-than-expected performance of the economy, was a result of the bankers natural inclination to look on the negative side.

He told the committee: “As you’d expect a bunch of dour central bankers to be, we’re focused on the downside and less focused on how everything could turn out well, but what could go really wrong and where can we potentially mitigate that.

“We do have to ask ourselves continually what could go wrong. We don’t have to see a ghost behind every corner, but we do have to ask ourselves what could go wrong.”

Mr Carney backed calls for a transitional period to limit any potential instability. He said: “If there is not such a transition put in place, in our view it will have consequences. We will work to mitigate those consequences as much as possible.”

Recent construction industry surveys such as the latest Markit/CIPS UK Construction PMI figures revealed the sector has shown great resilience in the face of great economic uncertainty.

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