The central bank will offer lenders extra liquidity provisions around the March 29 exit date, a measure designed to smooth the plumbing of the market operating in times of potential stress. It mirrors its actions around the 2016 referendum.
While there’s a chance that Prime Minister Theresa May will delay Brexit and stop the U.K. leaving the EU by the end of March, the BOE’s actions show it’s not taking any chances. Carney has previously said that the financial sector should be able to cushion any blow rather than “amplifying a shock and being part of the problem.”
In comments to lawmakers on Tuesday, Carney said it’s certain the economy will suffer if there is no agreement with the EU in place. “If we’re back here in May, and there’s no deal, no transition, I guarantee you the path of GDP will be materially lower than it is in this February forecast now,” he said.
His colleague Gertjan Vlieghe added that while businesses want clarity, going for a no deal outcome for the sake of ending the uncertainty would be far more disruptive. [...]
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Bank of England Governor Mark Carney's Annual Report for the Treasury Select Committee
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