Brexit is no longer the biggest risk to financial stability, Mark Carney says

Mark Carney Credit: PA

Brexit is no longer the single biggest risk to financial stability, the governor of the Bank of England has said.

Asked by MPs on the Treasury Select Committee if Brexit remains the biggest risk to the UK's financial stability, Mark Carney said: "Strictly speaking, the view of the committee is no."

But the Canadian added that Britain faces global risks and adapting to life outside the EU has the potential to "amplify" those risks.

He said the disruption to Britain's powerhouse financial services sector during Brexit would lead to "shortfalls in capacity" and capital liquidity being in the wrong place, which could have a greater impact on the EU than in the UK.

Mr Carney said: "I am not saying there are not financial stability risks in the UK, and there are economic risks to the UK, but there are greater short term risks on the continent in the transition than there are in the UK."

The Bank said in November the outlook for Britain's financial stability following the Brexit vote "remains challenging" and is dependent on an orderly exit from the European Union.

Asked whether Britain needs to thrash out a transitional deal for the financial services sector as soon as Article 50 is triggered, Mr Carney said it would be in the interest of both the UK and the EU.