Mark Carney warned a no deal Brexit would be the worst hit to the economy since the 1970s era of the three day week and the winter of discontent.
The Bank of England Governor told MPs today crashing out of the EU in March without a deal or a transition period would be a ‘large, negative shock’ to Britain.
Mr Carney told the Treasury Committee the Bank would have few options to intervene like it did during the financial crisis.
Mark Carney (pictured today at the Treasury committee) warned a no deal Brexit would be the worst hit to the economy since the 1970s era of the three day week and the winter of discontent
The latest intervention will enrage Brexiteers who consider Mr Carney to be the high priest of Project Fear, scaremongering over the mission to leave the EU.
Asked about a ‘no deal, no transition’ exit in March, Mr Carney said: ‘This would be a very unusual situation.
‘You would have to stretch back at least in our analysis until the 1970s to find analogies.’
Mr Carney said the problems would be in the ‘real economy’ as businesses faced their logistics systems slowing down, hitting confidence.
Strikes, power cuts and unemployment at 1.5million: Britain’s economy in the 1970s
Britain’s economy on the 1970s was ravaged by powerful unions and lingering stagnation.
Unemployment surged to 1.5million in 1978, the highest since the war.
Factories were placed on a three-day week to conserve electricity amid coal miner strikes between 1973 and 1974.
Strikes consumed much of the decade – culminating in the Winter of Discontent in 1978/79 and the rise of Margaret Thatcher.
He said it would be dramatically different to the financial crisis which was eased by ploughing money into banks to cover wildly overvalued assets.
And the Governor told MPs: ‘(A no-deal) is not in the interest of any of the parties.
‘But our job is not to make the political calculation. Mistakes happen sometimes.
‘Events, people run out of time (…) so we need to be in a position in which we ended up with no deal, no transition for whatever reason either by choice or by accident, that we can give the assurance and the valid insurance that the financial system will be there.’
Mr Carney said the Bank welcomes ‘the transition arrangements in the withdrawal agreement’ and noted the ‘possibility of extending that transition period’.
The Prime Minister is aiming to win over hesitant MPs to back her deal reached in Brussels last week, having faced a string of resignations after she unveiled the agreement.
The Bank of England Governor told MPs on the Treasury Committee (pictured) today crashing out of the EU in March without a deal or a transition period would be a ‘large, negative shock’ to Britain
The transition period is supposed to start on March 29 and will end on December 31, 2020.
Mr Carney told MPs Mrs May’s Brexit ‘supports economic outcomes’.
In the hearing, Bank of England chief economist Andy Haldane said there were already some signs of ‘uncertainties around a cliff-edge’ which has begun to have material impact on investment plans for businesses.
‘As we have got nearer to the point of withdrawal that has had a more material adverse impact on some companies’ investment plans,’ he said.
Best for Britain chief Eloise Todd said: ‘Brexit is threatening to turn back the clock on the economy and threatens jobs and our economy. We face an imminent threat from Brexit.
‘But no deal is just scare tactics by the government. The real choice is between the Prime Minister’s bad deal and staying under the deal we have now.’