Currently, as a full member of the EU, the UK enjoys the best possible trading relationship with the EU. By definition, leaving the EU means that the trading relationship must be adversely affected and the question, therefore, is only how bad the damage will be. Despite the inescapable logic of this position, the May government has steadfastly maintained that “no deal is better than a bad deal”. It makes for a fighting soundbite, but does not stand up to any scrutiny – it is highly unlikely that any realists in government believed this claptrap for a moment, of course. However, pulled in all directions by the various factions in her cabinet and party, Mrs May is leading the nation perilously close to “no deal” territory; not from choice, but because it is the consequence of the compromises she has adopted.
Mark Carney, the governor of the Bank of England, has recently weighed into the debate arguing strongly that a no deal scenario is not in the interests of either the UK or the EU. He suggested that the possibility of such a situation is both "uncomfortably high" and "highly undesirable". A no deal Brexit would cause disruption to trade and economic activity and cause higher prices for some time.
Speaking on the BBC’s Today Programme, Mr Carney said: "We have made sure that banks have the capital, the liquidity that they need and we have the contingency plans in place. There is a very broad range of potential outcomes to these Brexit negotiations and we are entering a crucial phase. Our job in the Bank of England is to make sure that those things don't happen. It's relatively unlikely but it is a possibility. We don't want to have people worrying that they can't get their money out. We've put the banks through the wringer to make sure that they have the capital. Whatever the shock could happen from, it could come from a no-deal Brexit, we've gone through all the risks of a no-deal Brexit."
Naturally, the governor’s comments were treated with the usual derision by the Brexit wing of the ruling Tory party with ERG chairman Jacob Rees-Mogg stating: "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." Of course, Mr Rees-Mogg provided no proof of his allegation and failed to explain how everything would be “tickety boo” were the UK to leave the EU without a deal (his own investment advisory business has set up an office in Ireland to facilitate trading from within the EU, of course).