Carney: No-deal Brexit risk 'uncomfortably high'

The possibility of a no-deal Brexit is "uncomfortably high" and "highly undesirable", Bank of England governor Mark Carney has told the BBC. Mr Carney said the prospect of the UK leaving the EU without a deal was "a relatively unlikely possibility, but it is a possibility". He said it was "absolutely in the interest" of the EU and UK to have a transition period.Critics poured scorn on the comments, calling them part of "Project Fear". Mr Carney's warning came ahead of Theresa May's meeting with French President Emmanuel Macron at his summer retreat on a small island off the French Mediterranean coast. The prime minister is cutting short a holiday in Italy as she continues to seek support among European leaders for her Brexit plans. The Bank governor told the BBC that the financial system was robust and could withstand any post-Brexit shocks."We have made sure that banks have the capital, the liquidity that they need and we have the contingency plans in place," he told the BBC's Today programme. "There is a very broad range of potential outcomes to these Brexit negotiations and we are entering a crucial phase." The pound declined on the currency markets in the wake of Mr Carney's comments, falling below the $1. 30 mark, but had recovered by early afternoon.Mr Carney said that if a no-deal Brexit were to happen, it would mean disruption to trade and economic activity, as well as higher prices for a period of time. "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," he said.Mr Carney added: "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. " However, he said that even with liquidity and capital, the banks could not solve all Brexit-related financial problems."There are a few things the EU government has to solve, " he said. "The UK has taken all the steps, all the secondary legislation it needs to.The European authorities still have some steps they need to take. We're having conversations and we expect those to be addressed." The governor of the Bank of England doesn't say anything by mistake. Like all central bank chiefs, he knows that his every utterance is subjected to minute scrutiny.So this warning appears to be a deliberate intervention at a crucial moment in Brexit negotiations from a governor who considers it part of his job to highlight risks to the financial system and the wider economy. Others consider him too political by half - his previous statements were labelled "beneath the dignity of the bank" by leading Eurosceptic MP Jacob Rees-Mogg. Mark Carney has been clear that the banking system is resilient enough to handle a no-deal Brexit, but today he made it just as clear that it's a test we should be very keen to avoid. As he h