‘Scale of risks around Brexit’ down, says Carney

Brexit no longer poses the single biggest risk to financial stability, the governor of the Bank of England has said, adding Britain’s exit from the European Union is a greater threat to financial stability in Europe than in the UK.

Asked the question by MPs on the Treasury Select Committee, Mark Carney said: “Strictly speaking, the view of the committee is no.”

However, the Canadian said Britain faces global risks and the process of adaptation to life outside the EU has the potential to “amplify” those risks.

Mr Carney said: “In the run-up to the referendum we said it was the largest risk because there were a series of positions and possibilities in the financial sector, things that could have happened, that could have had financial stability consequences.

“So because we viewed it as the biggest domestic risk that was why the £250 billion of capital was prepositioned with us.

“But having got through the night and the day after, the scale of the amount of the risks around Brexit has gone down to the UK, but the process can amplify.”

Mr Carney said the disruption to Britain’s powerhouse financial services sector during Brexit would lead to “shortfalls in capacity” and capital liquidity being in the wrong place, which could have a greater impact on the EU than in the UK.

He said: “I am not saying there are not financial stability risks in the UK, and there are economic risks to the UK, but there are greater short term risks on the continent in the transition than there are in the UK.”