No-deal Brexit is considerable risk to UK economy

LONDON: Bank of England Governor Mark Carney said a no-deal Brexit was a considerable risk to Britain's economy and it would be better to have a transition period that allows the country to adjust to being outside the European Union.

Both candidates to replace Theresa May as Britain's prime minister have said they are prepared to take the country out of the EU without a deal if necessary.

"It is a considerable risk in the event of no-deal," Carney told The Economist in an interview broadcast on the magazine's website on Friday. "(In) a major change it's always better to have a period of transition."

The BoE and Carney have previously warned that a no-deal Brexit would deliver big hit to Britain's economy.

Brexit supporters have accused him of being a doom-monger after the BoE detailed the estimated size of the hit in response to a request from parliament.

"Truth hurts sometimes," Carney told The Economist when asked about the criticism. "If you ask for something, you get it and you have to deal with the reality."

Carney also repeated the BoE's message that the banking system was ready for a no-deal Brexit which could make it cut or raise interest rates, depending on the size of the hit to demand and how much the pound falls, which could push up inflation.

"It's in many respects an unprecedented situation. But we're ready for it in terms of the financial sector... and we have tools to adjust in either direction as appropriate," he said.