Giving evidence to the Treasury Select Committee yesterday, Mark Carney (pictured) defended the Bank against accusations that it had tried to frighten voters for political reasons in the lead up to the EU referendum.
He said actions taken by the Bank after the leave vote had helped to mitigate the impact.
Sky News reported Carney’s comments: “In the run up to the referendum, we felt it was the largest risk because there were things that could have happened which had financial stability implications.
“Actions were taken to mitigate that, but having got through the day after, the scale of the immediate risks had gone down.”
The bank has already raised growth forecasts in November and at the time Carney said the housing market had proved more resilient than expected, benefiting from “a smaller drag from uncertainty” and “very supportive financial conditions”.
Yesterday Carney said the main risk from Brexit is that it could amplify other dangers to the economy. As reported by the Financial Times, those include mounting consumer credit, a weakened commercial real estate market, the current account deficit and the fall in the value of sterling.
Carney said the financial sector needs a transition plan for Brexit – but that the continent may suffer a worse financial crisis as a result of Brexit than Britain.
However, he cautioned that there is still concern for the economy and rates of consumer credit growth.