Treasury analysis on Brexit impact '˜sound': Carney

Mr Carney told members of the economic affairs committee at the House of Lords that he did not dispute the analytical framework used for the report, which concluded that the UK economy would be 6% smaller if it left the EU than it would otherwise be in 2030.

This came as he re-inforced recent warnings from the Monetary Policy Committee (MPC) that uncertainty around the EU referendum was beginning to hamper economic activity.

He told the committee that risks posed by the EU referendum had “the potential to reinforce existing vulnerabilities in relation to financial stability”, which include the UK’s high current account deficit, the property market and market liquidity.

He added: “Some elements of these risks may be beginning to manifest.”

He reaffirmed the MPC’s position that it had seen “some softening in growth during the first half of 2016” due to uncertainty surrounding Britain’s vote on the EU.

He said that Brexit could also trigger an extended period of uncertainty for the economic outlook which could harm the “prospects for export growth”.

He said this uncertainty may push down on demand in the short-run.

But Mr Carney defended his position from critics who accused him of venturing into politics when assessing the economic impact of the referendum vote.

He said: “Assessing and reporting major risks does not mean becoming involved in politics.

“Rather it would be political to suppress important judgments which relate directly to the Bank’s remits and which influence our policy actions.”

It comes after Mr Carney previously pinpointed the threats from the EU referendum as “the most significant near-term domestic risks to financial stability”.

mfl