Brexit no longer biggest economic risk to UK, says Mark Carney

Bank of England governor had warned of economic consequences of Leave vote

Brexit is no longer the biggest single risk to Britain's financial stability, the governor of the Bank of England has told MPs.

Mark Carney, who had warned before the referendum about the economic consequences of voting to leave the EU, said the threat had receded since the vote, partly because of actions the bank took in the days that followed it.

“In the run up to the referendum, we felt it was largest risk because there were things that could have happened which had financial stability implications,” Mr Carney said. “Actions were taken to mitigate that, but having got through the day after, the scale of the immediate risks has gone down.”

The governor’s acknowledgement that the referendum result had thus far damaged the economy less than expected delighted pro-Brexit Conservatives, who accused the bank and the treasury of scaremongering in advance of the vote.


The British economy grew by about 2 per cent in 2016, according to a report on Wednesday from the National Institute of Economic and Social Research. This is slightly less than in 2015. But a research fellow at the institute warned that the fall in the value of sterling since the referendum could have a negative impact later this year.

"The composition of economic growth in 2016 has been unbalanced," said James Warren. "Robust consumer spending has compensated for the weakness in other sectors. Consumers face significant headwinds this year and next, not least the increase in consumer price inflation that is a consequence of pass through from the depreciation of sterling in 2016.£

Yearly payment

Earlier, an immigration minister said that, after Brexit, businesses could have to pay £1,000 a year for each highly skilled EU national they wished to employ.

Robert Goodwill told the House of Lords Brexit committee that the charge, which will be levied on employers of non-EU nationals from next April, could be applied in the future to those from the European Union.

“I don’t think many people are aware that in April of this year we are bringing for non-EU workers coming into the UK an immigration skills charge,” he said. “So if one wishes to bring in an Indian computer programmer on a four-year contract on top of the existing visa charge, there will be a fee of £1,000 per year.

“So, for a four-year contract, that employer will need to pay £4,000. That’s something that currently applies to non-EU. That may be something that’s been suggested to us that could apply to EU.”

Prime minister Theresa May made clear this week that she was determined to end the free movement of people from the EU, even if it came at the cost of access to the single market. Labour leader Jeremy Corbyn on Tuesday drew back from hardening his party's position on the issue, stating that although Labour was "not wedded" to free movement after Brexit, it did not rule it out either.

“We cannot afford to lose full access to the European markets on which so many British businesses and jobs depend,” Mr Corbyn said. Changes to the way migration rules operate from the EU will be part of the negotiations.

“Labour supports fair rules and the reasonable management of migration as part of the post-Brexit relationship with the EU, while putting jobs and living standards first in the negotiations,” he said.

“At the same time, taking action against undercutting of pay and conditions, closing down cheap labour loopholes, banning exclusive advertising of jobs abroad, and strengthening workplace protections would have the effect of reducing numbers of EU migrant workers in the most deregulated sectors, regardless of the final Brexit deal.”

Denis Staunton

Denis Staunton

Denis Staunton is China Correspondent of The Irish Times