Mark Carney has warned MPs to resolve the Brexit impasse to avoid problems for the global economy.
The Bank of England Governor warned a no-deal Brexit would create an “economic shock” at a time when China’s economy is slowing with rising trade tensions.
“It is in the interests of everyone, arguably everywhere” that a Brexit solution is found, he said.
At a global level, Mr Carney said that growth had been slowing in “all regions” since 2016 after peaking at 4%.
He said that growth was likely to stabilise, however this came with a warning that further Chinese economic slowdown but warned that a further slowdown in China, rising US- China tensions and pure complacency could see a 3% drop in Chinese GDP would knock 1% off global activity, including half a per cent off each of UK, US and euro area GDP,” he said.
He added that a “larger increase in tariffs of 10 percentage points between the US and all of its trading partners could take 2.5% per cent off US output and 1% off global output.”
The governor urged all involved that economic risk would not be going anywhere in a hurry and to address rather than ignore the problem.
“Although the economic and financial imbalances in the global economy do not yet appear to contain the seeds of their own demise, global momentum is softening,” he said.
Brexit issues have also caused the Bank to cut its UK growth forecasts.
In a speech Mr Carney said trade tensions and Brexit are “manifestations of fundamental pressures to reorder globalisation”, and that quitting the bloc could undermine global expansion.
“It is possible that new rules of the road will be developed for a more inclusive and resilient global economy.
“At the same time, there is a risk that countries turn inwards, undercutting growth and prosperity for all.”
Brexit has created a “high level of uncertainty”, he said, and citing the slowest economic growth since 2012 added “companies are holding back on making big decisions”.
“A no-deal would be an economic shock for this country, and this would send a signal globally about re-founding globalisation. That would be unfortunate,” he said.
Source: BBC News