POLITICS
04/12/2018 11:30 GMT

Chaotic Brexit Could See Food Prices Rise By 10%, Mark Carney Warns

A stark prediction from the governor of the Bank of England.

Food prices in the UK could rise by as much as 10% in the case of a chaotic Brexit, the governor of the Bank of England has warned.

Mark Carney told MPs on Tuesday that in “the most extreme scenario”, Brits could expect the cost of their shopping baskets to soar after the UK leaves the EU.

Even in the case of a more orderly Brexit, with a planned transition period, the cost of food would still spike by around 6%, Carney said.

“For individual food products it’s going to vary,” he told Parliament’s Treasury committee on Tuesday. “But what people will do if the price of something goes up more than something else, they will switch products.”

In response to Labour MP John Mann, who said his constituents were unlikely to go vegan if the cost of meat went up, Carney replied: “We might buy a little more local lamb as opposed to imported veal.”

Carney also appeared to warn the committee against Theresa May’s Brexit deal, in particular the backstop, which would see the whole of the UK remain in the EU customs union for a limited period in order to avoid a hard border between Ireland and Northern Ireland. 

While the Bank of England would respect “any path” taken by parliament, the governor said: “From a financial stability perspective, it’s highly undesirable to be a rule-taker and lose supervisory autonomy for any considerable length of time”. 

Carney’s grilling by the cross-party group comes a week after the Bank of England published a stark post-Brexit economic forecast, warning that GDP would fall by as much as 8% in the case of a disorderly no-deal exit from the EU.

Even if Britain left under Theresa May’s proposed deal, the economy would be at least 1% smaller by 2024 than if voters had backed remain in the referendum, the report concluded.

The forecast was blasted as “scaremongering” by some Brexiteers, with Jacob Rees-Mogg calling the predictions “hysterical”. He branded Carney “a second-tier Canadian politician” who had politicised the Bank of England.

Meanwhile, the bank’s former governor Lord King today called the predictions “dubious” and “questionable”.

But Carney defended the report, telling MPs it wasn’t put together at last minute. “You asked for something that we had and we brought it and gave it to you,” he said. 

“We had a core team of 20 senior economists working on this for a couple of years,” he said, adding that another 150 professionals also worked on the predictions.

Carney’s appearance in front of MPs comes on day one of a five day debate in the House of Commons on May’s proposed Brexit deal, and ahead of the key meaningful vote on December 11. 

A refusal by MPs to accept the the PM’s proposal could see the UK crash out of the EU without a deal, instead relying on World Trade Organisation rules.