If Brexit doesnt capsize the British economy, itll be in no small part thanks to Mark Carney. The governor of the Bank of England has been one of the loudest voices warning about the dangers of the United Kingdom crashing out of the European Union without an agreement. Although he so far has shied away from any solid forecasts about the impact of a no-deal Brexit, he warned it is “quite an extreme” and “highly undesirable” scenario that would result in a hike in inflation worse than that caused by the post-referendum dive in sterling, thanks to the added impact of higher trading barriers and possible supply disruptions. All that would translate into a squeeze on real household incomes. “Parties should do all things to avoid it,” Carney said last summer.
Warnings like these have put the 53-year-old Canadian economist on the political front line — his assessments dismissed by his critics as scaremongering. The Tory Brexiteer Jacob Rees-Mogg has called Carney “the enemy of Brexit” and “the high priest of Project Fear.” The Bank of England was lambasted after the Brexit vote for gloomy forecasts predicting a recession that never happened. But Carneys defenders point out that it is likely the Bank of Englands forceful intervention into the economy that prevented the banks predictions from materializing.
Once the U.K. leaves, it will be again up to the Bank of England to smooth the journey to any sunny uplands of Brexit. Even if the U.K. benefits from the freedom to make new trade deals, there will inevitably be a period of adjustment as the economy reorients itself, which Carney has highlighted as a big job ahead. At the request of the government, he has extended his term to January 2020, having previously announced hed step down in June.
Bank of England Governor Mark Carney during a press conference in the City of London | Victoria Jones/AFP via Getty Images
And if the U.K. does leave the EU without a deal, it will be up to Carney to guide the economy through the choppy waters. In preparation for such a scenario, Carney has worked with European officials to make sure financial firms dont face a cliff edge and that contracts can continue to be serviced. He also required British banks to run stress tests to ensure theyre prepared for “severe, but plausible” financial turbulence. “The financial system will be ready for that undesirable and still unlikely possibility,” Carney said last summer.