The Bank of England said that British banks have enough capital to secure themselves in the likelihood of a no-deal Brexit and global trade war.
British banks hold £1 trillion in liquid assets to sustain themselves in the event of no-deal Brexit and trade war, media reports said. However, the central bank also said that a no-deal Brexit would disrupt the financial markets and overall the UK economy.
The uncertainty that comes with Brexit and Trump’s trade war has been posing threats to the financial landscape in the UK, media reports said. Although banks are prepared for a no-deal Brexit , the UK economy would be hurt if Britain left the European Union without a transition deal.
Carney said, “In a disorderly Brexit, a range of UK asset prices would be expected to adjust sharply, tightening financial conditions for UK households and businesses.”
There has been a significant reduction in foreign investors purchasing British commercial property and select company loans, observed the Bank of England. In the first quarter of 2019, highly indebted British companies saw foreign investments at 14 percent of last year’s quarterly average.
Carney also said that it is important that Britain remains an attractive landscape for foreign investors even after Brexit.
“There has been a deterioration in the quality of inflows…that are financing the current account deficit,” Carney said. However, the bank said that Britain is much prepared for a disorderly Brexit than it was six months ago.
Policy chair of the City of London Corporation Catherine McGuinness said that the risk of no-deal Brexit is ‘dangerously close’ and businesses remain hostage to the uncertainty that is rising.