Bank: UK 'prepared for Brexit and trade war fall-out'

Bank of England Governor Mark Carney listens to a journalist's question during an Inflation Report Press Conference at the Bank of England in the City of London Britain

Mark Carney Bank of England governor

These comments came via the bank's periodic financial stability report which details the current status of the British financial system as well as its possible future status.

Speaking at a news conference after the publication of the BoE's latest Financial Stability Report, he said he was committed to steering Britain's economy as its Brexit deadline on October 31 approaches and to leading the BoE as it searches for a new governor.

Carney said while banks were well prepared for Brexit, this did not mean the economy would be unscathed if Britain left the European Union on October 31 without a transition deal, something both contenders to be the next prime minister say is possible.

"The UK banking system remains strong enough to continue to lend through the wide range of UK economic and financial shocks that could be associated with Brexit", it added.

The central bank's warning comes as the two contenders to succeed Theresa May as prime minister are flirting with the idea of leaving the European Union without agreeing withdrawal terms, an outcome the central bank has warned would likely cause economic disruption.

Businesses and authorities have been planning for a no-deal scenario since November, the report said, with the Financial Policy Committee (FPC) concluding they are now more prepared for the ramifications on the United Kingdom economy in the event of a no-deal Brexit.

Nonetheless, "material risks of economic disruption remain" beyond Brexit concerns, with the ongoing US-China trade war and the global slowdown in economic growth, the report said. "Overall, the stress scenario was more severe than the global financial crisis".

For leveraged loans, loans to riskier corporate borrowers, inflows were 17% of the 2018 average, according to the central bank.

The study also warned that prices will soar for Northern Ireland shoppers and stated the overall impact will be "profound and long-lasting".

The Bank also said it would be reviewing the macro-economic vulnerabilities of the economy on funding from "open-ended" funds, recently in the news after the problems with redemptions in Neil Woodford's fund.

Bank of England Governor Mark Carney also warned that Libra would need to be "rock solid" security wise from the very beginning.

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