The Bank of England thinks that the threats posed by Brexit to the UK’s financial stability have receded, according to governor Mark Carney.
Speaking to the Commons Treasury Committee yesterday, Carney said that growing consumer credit, a weaker commercial real estate market, the fall in sterling and the deficit in current accounts now posed the greatest risk.
The governor said that Brexit still posed financial stability risks, but that the other 27 members of the EU now faced a greater threat than the UK.
While defending the Bank’s predictions of post-Brexit financial turmoil, Carney said his current position was based on the situation to date.
The Bank, Carney said, had helped reduce economic turmoil following the Brexit vote because its predictions had encouraged businesses to make contingency plans.
Furthermore, Carney said the Bank had helped the UK through a potentially challenging post-referendum period by cutting interest rates and by safeguarding the UK’s banking system.
The governor was quizzed by MPs about comments made by Bank of England chief economist Andy Haldene, who compared economist’s failure to foresee the 2008 financial crisis to former BBC weather presenter Michael Fish’s failure to predict the gigantic storm of 1987.
Carney said that the Bank’s predictions of financial upheaval in the event of a Brexit vote were less serious than its inability to foresee the 2007-08 financial crisis.
Carney also said that economic forecasters help ‘make the weather’, and as such their work cannot be compared to weather forecasts.
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