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Governor of the Bank of England Mark Carney warns there will be an economic cost to a 'no deal' Brexit

Trade make us wealthier. Exchanging goods and services with other countries enriches us as well as shaping our culture and our politics.

However, political attitudes to free trade are hardening.

President Trump is in the process of imposing tariffs on China, the European Union and the US's partners in NAFTA.

The Governor of the Bank of England, Mark Carney, warns that these are the opening shots of a trade war, and if it accelerates then the British economy will be affected.

“If the global environment shifts from one of relatively open markets to one of increasing closed markets that’s not good for the UK economy, it’s not good for world economy,” Carney told ITV News.

Mark Carney’s speech in Newcastle - the north-east was once home to some of the world’s busiest trading ports - was pretty upbeat.

In his view, the UK economy has bounced back after the disruption caused by the snow at the beginning of the year, in precisely the way the Bank of England had predicted.

Carney told journalists that the bounce back will be bigger still if England wins the World Cup, and he repeated his message that households and businesses should be prepared for “gradual” and “limited” interest rate rises over the next few years.

The market is betting the first hike will happen next month.

What could go wrong? Plenty.

The present picture looks settled, the future could get “bumpy”.

The next few months will be decisive.

Trade disputes may intensify and we will start to learn more about what our future trading relationship with the European Union will look like.

Britain's future prosperity is dependent on how the Brexit talks go. Credit: PA

Jaguar Land Rover is the latest company to express concern about direction of Brexit negotiations. It warns that a bad deal could wipe out much of its profits and lead to the closure of factories.

Mark Carney has repeatedly stated that the vote to leave the EU has already damaged Britain’s prosperity, albeit not in the disastrous way that most economists predicted before the referendum.

On Thursday he suggested that if the government sticks to its red-lines, and we end up with a trading relationship with the EU that is neither as free or frictionless as it is today, then some businesses will inevitably suffer.

Carney told ITV News: “The issue is there could be circumstances where existing plants, existing activities are no longer economic and unfortunately those would shut down.

"That’s why this is complicated, that's why government taking its time and why negotiations are so important.”

The Bank of England’s economic forecasts assume that Britain's departure from the European Union with be smooth and orderly.

Theresa May is off to Chequers. Credit: PA

The Prime Minister is off to Chequers on Friday to persuade her divided cabinet to agree on a common negotiating position with Brussels

The occasional minister still suggests publicly that if Britain were to leave the EU abruptly, next March, without a withdrawal agreement that it wouldn’t be a disaster.

Carney insists that crashing out would have severe consequences. “There will be an economic cost,” he says, adding “no one can seriously doubt that".

What happens next to the economy depends greatly on the outcome of Brexit negotiations.

The Government’s strategy is to accept a less open trading relationship with the EU in return for closer ties with the rest of the world.

“A step back to jump forward” as Carney puts it.

Put another way, in the short-term our prosperity will almost inevitably suffer but, further out, there’s no reason Britain can’t thrive.

“As soon as there is clarity, businesses will adapt,” Carney insists.

As long as there is clarity, as long as there is an agreement.