Bank of England governor Mark Carney on Friday warned that a no-deal Brexit would be a shock for Britain, causing supply disruption and potentially undermining entire sectors of the economy such as the car industry and farming.
“With no deal the shock to the economy is instantaneous and instantly.... you actually have businesses that are no longer economic,” he told BBC radio, warning that the number of companies affected could be “substantial”.
Carney also said that in the event of a no-deal Brexit, the falling pound would suddenly increase prices for imported goods such as petrol and food and force up inflation.
The governor added he was still expecting a deal with Brussels, which Boris Johnson's new government has said it is aiming for.
But he warned there was “a significant possibility” that Britain could leave the EU with no divorce agreement.
“There are some very big industries in this country where that which is highly profitable becomes not profitable, becomes not economic,” in case of no-deal, Carney said.
“Very difficult decisions need to be taken.”