The governor of the Bank of England confirmed today that Brexit is not the biggest risk to the UK's financial stability.
Speaking in front of the Treasury Select Committee, Mark Carney said that it was the opinion of the Bank that the biggest risks to the UK's financial system were global ones.
"[Brexit] has some potential to amplify those risks but these risks would still be there if we were not leaving the European Union," Carney said.
The Bank of England governor was explaining the proposals laid out in the Bank of England's Financial Stability Report, which was published in late November at the same time the Bank's most recent round of stress test results were released.
When the MPs questioned Carney today on the proposals put to them by top City bosses yesterday – that an unclear Brexit with no transition period would put businesses at risk – Carney said "the consequence [of this] would be greater for Europe than the UK", although there would be some risks for the UK and it was in the country's best interests for such arrangements to be secured.
However, in a flurry of back-and-forth between the governor and Committee chair Andrew Tyrie, Carney refused to concede that Bank of England chief economist Andy Haldane was correct when he said the Bank had had a Michael Fish moment with its warnings on Brexit, and that his institution's actions helped to mitigate most of the serious financial troubles in the aftermath of the vote.
"I think we helped make the weather," Carney added, while noting that the warnings he had given in the past were based on the knowledge that there were "things that could have happened that would have financial stability [consequences]".
In the run-up to last June's referendum, Carney gave the dire warning that the UK could be plunged into a recession if the country voted to leave the EU.
The governor came under fire for those comments. In a Committee hearing last July, Tyrie blasted his actions as a "deliberate attempt to frighten the voting public by the Bank with a political motive".
Commenting after today's Committee hearing, Tyrie said:
The governor has given strong advice today, both to the UK government and to the governments of the rest of the EU. He’s told the government that it is 'highly advisable' to seek agreement to transitional arrangements, and at the start of the negotiations.
And he's also told the UK’s negotiating counterparts in the EU that they, more than the UK, are vulnerable to financial stability risks during the period of transition. I hope they are all listening.