Former Bank of England governor Mervyn King says UK needs a "Brexit fallback" in case of "no deal"

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Lord King was governor of the central bank for a decade, including during the financial crisis (Source: Getty)

The UK needs a "credible fallback" in the event that Brexit negotiations end with no deal, former Bank of England governor Mervyn King has said.

The former governor, who headed up the central bank between 2003 and 2013, added that the government has already "probably wasted a year".

Speaking to BBC Radio 4's Today programme, Lord King said it was important that the negotiation process succeeds.

Read more: Business backs Philip Hammond's vision for a transitional deal

But he added that "it cannot succeed without a credible fallback position and that is something which I think is a practical thing that the civil service ought to be taking a lead on."

He said it was vital that the other side believed the UK's fallback plan was "credible" in order to get the best Brexit deal, saying "we need to able to say if we can’t reach an agreement we will nevertheless leave and we can make it work.”

Read more: Carney: The UK's financial sector could double in size in 25 years

His comments follow warnings from current Bank of England governor Mark Carney and his deputy Ben Broadbent, who both said that a smooth transition deal is necessary to prevent harm in the UK.

Deputy governor Ben Broadbent said that if consumers anticipate a cliff edge transition, this could weigh on spending.

Prime Minister Theresa May and some of her cabinet colleagues have previously said: "No deal is better than a bad deal."

But changing tariffs overnight after leaving the Customs Union could result in the price of many everyday items soaring.

Read more: Inflation has fallen – and so should Bank of England desire for a rate hike

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