Brexit no longer main risk to UK economy, Carney says

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The Bank of England no longer thinks Brexit is the largest domestic risk to UK financial stability, according to governor Mark Carney.

Carney told the Commons Treasury Committee yesterday that the main threat came from four areas: growing consumer credit, a weaker commercial real estate market, the fall in sterling and the deficit in current accounts.

However, Carney said Brexit could “amplify” these dangers, according to the Financial Times.

The governor said he changed his mind because the EU referendum vote had not caused huge financial turmoil.

But Carney defended the Bank’s predictions of post-Brexit financial woe.

Carney said the Bank had helped cut the economic risk of the Brexit vote because its forecasts had prompted firms to make contingency plans.

The governor’s comments defy those of Bank of England chief economist Andy Haldane, who last week said economists are “to some degree in crisis” after failing to foresee the 2008 financial crisis and the impact of the Brexit vote.

In a speech at the Institute for Government in London, Haldane compared economists’ failure to predict the 2008 financial crisis to former BBC weather presenter Michael Fish’s inaccurate forecast before a storm hit the UK in 1987.

But Carney said economic forecasters helped “make the weather” and so their work could not be compared to weather predictions.