Carney said on Friday that the chances of a no deal Brexit are “uncomfortably high” and said that politicians must “do all things to avoid it”.
But his Conservative critics have hit out at Carney’s comments.
Jacob Rees-Mogg, who leads the Conservative pro-Brexit European Research Group, said: “Mark Carney has long been the high priest of Project Fear, whose reputation for inaccurate and politically motivated forecasting has damaged the reputation of the Bank of England.”
Iain Duncan Smith echoed Rees-Mogg’s comments, telling the The World At One on Radio 4 that a no deal “doesn’t exist”.
The former work and pensions secretary said: “No deal is being bandied around as though there is some outer darkness that the UK would go to that nobody else exists in.
“The reality of no deal is no special trade deal with the EU, but a no deal doesn’t exist, because it would be a deal under the [World Trade Organisation]. We already operate under the WTO, as does the EU.”
Carney said if the UK failed to strike a trade deal with the EU it would mean “higher prices for a period of time” for British consumers.
Pushed on what no deal would mean for people, Carney said “disruption to trade as we know it” before adding: “As a consequence of that, a disruption to the level of economic activity, higher prices for a period of time.
“Our job at the Bank of England is to make sure those issues don’t happen in the financial system so that people will have things to worry about in a no-deal Brexit, which is still a relatively unlikely possibility but it is a possibility, but what we don’t want to have is people worrying about their money in the bank, whether or not they can get a loan from the bank – whether for a mortgage or for a business idea – and we have put the banks through the wringer well in advance of this to make sure they have the capital.”
Carney’s intervention came as Theresa May cut short her holiday to meet Emmanuel Macron in France as she intensifies efforts to win over support in Europe for her Brexit plans.