Bank of England governor Mark Carney speaks during the annual Bankers and Merchants Dinner at The Mansion House in London, the UK, on June 20 2019. Picture: BLOOMBERG/LUKE MACGREGOR
Bank of England governor Mark Carney speaks during the annual Bankers and Merchants Dinner at The Mansion House in London, the UK, on June 20 2019. Picture: BLOOMBERG/LUKE MACGREGOR

London — Bank of England (BoE) governor Mark Carney has dismissed a claim by Boris Johnson, the front-runner in the race to become prime minister, that Britain can avoid the hit of EU trade tariffs in the event of a no-deal Brexit.

Carney told the BBC that leaving the EU without a transition deal should be a choice taken with “absolute clarity” about what it would mean for Britain’s economy.

The central bank governor said there would be long-term as well as short-term damage for Britain’s economy from a no-deal Brexit and many companies were not fully ready for such an abrupt shift.

Johnson has said that world trade rules include a provision, known as Article 24 of the General Agreement on Tariffs and Trade, which permits trade to continue unchanged between two parties if they so decide.

But Carney said such an arrangement applied only when a trade deal was in place or about to be in place, the BBC said.

“So ... we should be clear that not having an agreement with the European Union would mean that there are tariffs, automatically, because the Europeans have to apply the same rules to us as they apply to everyone else,” he said.

Carney has previously warned about the economic impact of a no-deal Brexit, prompting anger among Brexit supporters.

Johnson and British foreign minister Jeremy Hunt, the other contender to replace Theresa May as prime minister, have said they are prepared to take the country out of the EU without a transition deal, if necessary.

Reuters