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Mark Carney warns no-deal Brexit could see 10% shopping bill hike

The Bank of England chief sets out the expected impact of an "extreme" Brexit while fending off criticism over his interventions.

Mark Carney
Image: Mark Carney has delivered his latest warning about the impact of a no-deal Brexit
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Mark Carney has warned that a no-deal Brexit could see average food shopping bills rise by 10%.

The Bank of England governor set out his view of the expected impact of crashing out of the EU without a withdrawal agreement as he appeared before MPs on the Treasury select committee.

Food prices would be expected to see a sharp one-off rise as the impact of new tariff barriers and a plunge in the pound takes effect, he said.

"In the most extreme scenario, on average your shopping bill goes up 10%," Mr Carney said.

The bank had already warned last week that a disorderly Brexit could push the UK towards the biggest slump in modern memory, with the economy shrinking by 8%, house prices crashing 30%, unemployment nearly doubling and inflation spiralling to 6.5%.

Mr Carney was asked by MPs to describe some of the ways in which this might affect ordinary consumers.

He said that even in a "more orderly scenario" for Brexit, food prices might go up by 6%.

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"For individual food products obviously it's going to vary but what people will do is what everyone does, it's that if the price of something goes up more than the price of something else, they switch products," he said.

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Mr Carney was asked about whether rising meat prices might make people become vegan.

He said: "We wouldn't all go vegan but we might buy a little more local lamb as opposed to imported veal."

The Bank of England governor also hit back at critics - including his predecessor - who feel the bank has become too closely involved in what they see as scaremongering.

Mr Carney told MPs that the Brexit scenarios published last week were based on detailed preparatory work to ensure banks and other lenders were prepared, and had been asked for by the committee.

He said: "There's no exam crisis. We didn't just stay up all night and write a letter to the Treasury committee.

"You asked for something that we had, and we brought it, and we gave it to you."

Previous bank governor Mervyn King joined criticism of Mr Carney on Tuesday.

"It saddens me to see the Bank of England unnecessarily drawn into this project," he said in an article on Bloomberg.