The EU is more at risk from a hard Brexit than the UK in the short-term, Bank of England Governor Mark Carney told the Treasury Select Committee yesterday.
Carney said it would be “highly advisable” for financial firms that do business with the rest of Europe to receive transitional arrangements after the 2-year negotiation period for leaving the EU to help them adapt.
Carney 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.
“I’m not saying there are not financial stability risks to the UK... but there are greater financial stability risks on the continent in the short term, for the transition, than there are for the UK."
The Governor said Brexit no longer represents the greatest risk to UK financial stability thanks to preparations made by the Bank before the EU Referendum in June.
After the UK economy showed stronger performance than expected in the second half of last year he signalled that the Bank of England will raise its economic forecasts.
Carney added: “I would say, and I’ll say this very lightly, which is that recent data would be consistent with some further upgrade of the forecast but that process has not yet started.”
