The Bank of England Governor said Brexit risks were exaggerated
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Mark Carney of the Bank of England said yesterday that he didn't consider Brexit the greatest financial risk to the country's economy anymore, although he was the one to predict harsh recession back in June.

During his yesterday's meeting with the Commons Treasury Committee, the Governor said that the state of Britain's financial industry could suffer only "outsize" consequences as a result of the country's decision to leave the European Union. He also added that Brexit has higher chances to jeopardize the financial industry in the continental Europe rather than in the U.K. itself.

"I think that the financial stability risks around that process are greater on the continent than they are for the UK. I'm not saying there are no financial stability risks to the UK, and there are economic risks to the UK. But there are greater financial stability risks on the continent in the short term, for the transition, than there are for the UK," said the Governor Carney, as reported by Reuters.

When asked about the current state of Britain's financial industry, Carney said that the sector has become a "self-reinforcing" mechanism in the last decades and is capable of mitigating the risks that emerge from the country's political decision. Nevertheless, he emphasized that the overall risks for the British economy are still "elevated", reported BBC.

The main reason for such unexpected positivity coming from the Bank of England official is the bank's approach towards managing the post-Brexit craze. Carney explained that he changed his opinion about the dangers of Brexit for the British economy after he could clearly see the result of the central bank's timely action that allowed to prevent a market meltdown. But, in order for the country to leave the EU as smoothly as possible, the government should allow for a long-enough transition period that is needed for the economy to adapt to the new market conditions, he said.

“In the run up to the referendum, we felt it was largest risk because there were things that could have happened which had financial stability implications. Actions were taken to mitigate that, but having got through the day after, the scale of the immediate risks has gone down,” Carney said, as reported by the Irish Times.

Normally, the country's famous banking industry was expected to be affected the most from Britain's decision to leave the bloc due to potentially losing the rights of access to the European market. One day before Carney's speech, the industry experts said that, according to the latest estimates, tens of thousands of jobs in the financial sector could be wiped away in case Britain's access to the EU market is limited.

However, just a few months before, the Governor Carney was one of the officials that claimed that the decision to leave the EU was the "most immediate and significant" threat to the British economy. Back then, the Bank of England also lowered its economic growth projection for 2017 to 0.8% while in November the bank significantly lifted that number to 1.4% again, as it got evident that the economy was not performing as bad as expected.

“I think Mark Carney has a point. Many economic pundits were grossly exaggerating. Continental Europe remains in deep water. But not so much because of Brexit but because of an unresolved banking crisis in Italy and a dysfunctional banking union,” said a German MEP Fabio De Masi, as reported by Politico.

During yesterday's Die Welt Economic Summit in Berlin, the Chancellor Philip Hammond admitted that the decision to leave the European Union was "irreversible" but he urged the EU governments, and Germany in particular, to do everything to ensure a smooth transition:

“The referendum decision is irreversible. People like me who believed that it was better to remain inside the EU and to campaign for reform within, have moved on. The debate is now about what kind of Brexit,” said the Chancellor Hammond, as reported by The Independent.

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