Bank of England governor warns that there is an uncomfortably high possibility of a no-deal Brexit

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Mark Carney has warned that the possibility of a no-deal Brexit is “uncomfortably high” and will lead to higher prices.

The Bank of England governor said both the UK and EU should “do all things to avoid” a no-deal scenario. He added that the banks had done the “stockpiling” and the country’s financial system was in a position to be able to withstand a shock that could result from the UK leaving the EU without an agreement.

Mr Carney’s warning came ahead of Theresa May’s meeting with French President Emmanuel Macron at his summer retreat on a small island off the French Mediterranean coast.

The prime minister is cutting short a holiday in Italy as she continues to seek support among European leaders for her Brexit plans.

The bank governor told the BBC that the financial system was robust and could withstand any post-Brexit shocks.

“We have made sure that banks have the capital, the liquidity that they need and we have the contingency plans in place, ” he told the BBC’s Today programme.

“There is a very broad range of potential outcomes to these Brexit negotiations and we are entering a crucial phase.”

The pound declined on the currency markets in the wake of Mr Carney’s comments, falling below the $1.30 mark, before recovering some ground.

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