Pound euro exchange rate: Carney warns UK is not ready for a no-deal Brexit
Dr Carney warned that UK economy could shrink by 8% in the immediate fallout from Brexit (Image: Getty)
The pound is sliding against the euro and the majority of its other peers this morning as Bank of England Governor Mark Carney warns that Britain’s economy is not prepared for a no-deal Brexit.
Speaking this morning, Dr Carney stressed the need for the UK to secure a transition deal as he suggested that many businesses are simply not ready for the shock of leaving the EU.
In an interview on Radio 4’s today programme Dr Carney said: “We know from our contacts with business, others know from their contacts, that less than half the businesses in the country have initiated their contingency plans for a no-deal Brexit.”
“All the industries, all the infrastructure of the country, are they all ready at this point in time? And, as best as we can tell, the answer is no.”
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Dr Carney’s remarks follow the release of the BoE’s Brexit impact assessment yesterday, in which he warned that in the central bank’s worst-case scenario, a no-deal Brexit could lead Britain’s economy into its darkest days since the Great Depression.
Given Theresa May is struggling to find the support needed from MPs to pass her Brexit deal through Parliament next month, the risks of a no-deal Brexit remain high, resulting in a number of jittery GBP investors this morning.
At the same time, the euro is putting further pressure on the pound this morning as EUR investors cheer the release of Germany’s latest employment figures.
According to data published by Destatis, unemployment unexpectedly fell from 5.1 per cent to 5 per cent this month, its lowest level since the unification between East and West Germany.
The drop in unemployment came as a welcome surprise to EUR investors, helping to dispel some concerns over Germany’s economy following a shock contraction in growth in the previous quarter.
Looking ahead, the GBP/EUR exchange rate may look to recoup some ground later this afternoon as Germany publishes its latest consumer price index, with economists forecasting that inflation will have slowed in November.
Meanwhile GBP investors are likely to remain focused on Parliamentary arithmetic over the next couple of weeks as they look to gauge whether or not the Prime Minister will be able to get the numbers to push through her Brexit deal.