Bank of England makes contingency plans for Brexit

The Bank of England (BoE) Governor, Mark Carney, says the Bank is looking at setting out a contingency plan for Britain if it were to leave the EU following the referendum this summer.

Although the Bank is said to pass no judgement about the outcome, it noted movements in sterling since the date of the vote was confirmed. Carney said to “assume the status quo continues” regardless of the outcome [1].

Carney is due to take his seat in the Thatcher Room at the Houses of Parliament today to be quizzed by the Treasury Committee about the Bank’s latest inflation report, and his views on the UK’s EU referendum [2].

Deputy Governor for the Bank, Minouche Shafik, is said to have predicted that interest rates will rise, although it will be difficult to predict the timing of wage pick-up [2].

The Bank says it will monitor developments in markets and confidence, feeding those changes into its models. Carney has stated: “We don’t make forecasts about the future value of the pound as part of the model” [2].

Further details are to be discussed on 8 March, when Carney is to testify to the Treasury Committee specifically in relation to the referendum.

The Prudential Regulation Authority (PRA) is keeping well-informed of the BoE’s plans, as it supervises Britain’s financial sector, so will be keen to avoid any firms being caught out.

Carney has insisted the Bank has the tools to protect the UK economy from the effects of global slowdown should they worsen. “We could cut interest rates towards zero. We could engage in additional asset purchases, including a variety of assets. We could also provide a perspective where we could adjust our policy horizon – in other words we could shorten our policy horizon over which we wanted to return inflation to target,” he said [3].

All companies in the market will need to decide what their role will be in future, and be prepared to adopt a flexible and adaptive approach to supporting a new solution, should the vote be for Britain to leave the EU [4].


[1] Reuters UK. ‘Bank of England making no judgements about EU referendum outcome’.

[2] The Guardian. ‘Bank of England making contingency planning for Brexit – business live’.

[3] BBC News. ‘Business live: Carney says Bank still has stimulus options’.

[4] City AM. ‘The Bank of England, blockchain and the future of the payments industry: Innovation, resilience or both?’.