BusinessGovernmentLeadership
June 24, 2016

U.K. ‘well prepared’ for Brexit – Carney

But Brexit could impact Canadians in four ways

Even as British stocks took a plunge and the pound sterling took its deepest dive since 1985, the Canadian head of the Bank of England said the country’s banks are in a far better position to weather the challenges posed by the historic referendum in which a narrow majority of British voters elected to leave the European Union.

“We are well prepared for this,” Mark Carney, the Governor of the Bank of England, calmly announced as he stood before cameras yesterday. “The Bank of England will not hesitate to take additional measures as required.”

Briton voted 52 per cent to 48 per cent to leave the EU which Britain joined back in 1973.  Following the vote, the British pound fell more than 20 per cent to around US$1.32, its lowers since 1985, before recovering to around $1.38.

Before taking his post as head of the Bank of England, the Irish-Canadian economist was the Governor of the Bank of Canada. Carney is widely credited for playing a major role in helping Canada avoid the worst impacts of the 2008 global financial crisis.

He said the Treasury and the Bank of England had engaged in “extensive contingency planning” well before the vote and the central bank is prepared to pump in additional cash to support the pound.

“The Bank of England has stress tested them against scenarios more severe than the country currently faces,” Carney assured. “As a result of these actions, UK banks have raised over £130bn of capital, and now have more than £600bn of high-quality liquid assets. Moreover, as a backstop, and to support the functioning of markets, the Bank of England stands ready to provide more than £250bn of additional funds through its normal facilities.”

Four ways Brexit impacts Canadians

A significant chunk of Canada’s economic growth this year could also be impacted by Brexit, according to local economic analysts.

The TSX experienced a sharp drop on the opening Friday. Oil prices fell slide by three per cent, to around $47.60 per barrel.

Brexit can impact Canada in four ways:

Exports – Canada exported nearly $16 billion worth of products to the U.K. in 2015. That account for about three per cent of our total exports, according to Statistics Canada. This makes the U.K. Canada’s third largest trading partner behind the U.S. and China.

With Britain’s departure from the E.U., Canada could lose out on expected benefits from the Comprehensive Economic and Trade Agreement (CETA) because the agreement may have to be renegotiated. The CETA is Canada’s trade agreement with the E.U. which is still under review.

Canadian housing market – Brexit could cause Canada’s hot housing market to keep on burning. The global market uncertainty could also keep interest rates low, keep mortgage rates low, “fanning the flames in the domestic housing market,” BMO Nesbitt Burns chief economist Douglas Porter, was quoted as saying in a Toronto Star report.

Strong U.S. dollar – Canadian travelling to the United States could find their vacation costing more. Disruption brought about by Brexit has caused the pound to weaken against the U.S. dollar.

Canadian investors lose out – Canadians invested nearly $69 billion in the U.K. in 2014, according to StatsCan and many Canadians have their retirement money invested in Britain through retirement funds like the CPP. At least in the short-term, Brexit has caused financial instability in the U.K. The International Monetary Fund was reported to have said that the U.K. is in danger of slipping into a recession similar to the one experience in 2008.

About this author

Avatar

Nestor Arellano

Nestor is a Toronto-based journalist who specializes in writing about technology and business. He is the editor of Vanguard Magazine and the associate editor of IT in Canada and a regular contributor to CGE.

0 comments

There are no comments for this post yet.

Be the first to comment. Click here.

Business
 
A Globe and Mail journalist made an interesting observation of trade...
 
Throughout the history of economic thought, government has long been seen...
 
In this edition of Canadian Government Executive, we take a look...
 
In late March the ONS detailed the occupations in the UK...
 
In this episode, J. Richard Jones talks with Jason Hermitage, Vice...
 
Carpenters and electricians have tools: hammers, saws, pliers, plungers and flashlights....
 
In this episode of CGE Radio, J. Richard Jones interviews Alex...
 
On October 17, Fujitsu Canada, Inc. announced the ScanSnap iX1500, a...
 
Mining embodies progress. Mining provides civilization with the materials required for...
 
A few years back, consultants with ghSMART told us the biggest...
 
Risk management is top-of-mind for many organizations and executives. It seems...
 
In April 2017, the City of Edmonton approved a new Public...
 
We learned in grade school that one plus one equals two,...
 
Making a successful digital transformation is tough. It can be costly,...
 
On the global scene, technology has revolutionized and automated the work...
 
Did your high school valedictorian go on to achieve greatness? High...
 
Today on CGE Radio, we speak with Craig Szelestowski, President and...
 
Today on CGE Radio, John Jones interviews Alex Miller the President...
 
Canadian Government Executive Media (CGE) and CATAAlliance , Canada’s one voice for...
 
Water is essential to sustain all forms of life and more...
 
Security professionals have an obligation to communicate risks and recommendations to...
 
During the past decade, the international university-level student population in Canada...
 
Professionals, managers, and executives in the cost estimation industry can gain...
 
Canadian Government Executive kicked off its CGE Leadership Series for 2017...
 
A new study from the Conference Board of Canada gives our...
 
As the 5th largest agricultural exporter on the planet, Canada plays...
 
In this episode, hear more about how Canada is a prime...
 
In the recent June issue, we published a captivating piece by...
 
The October issue of Canadian Government Executive on Focusing on Customer...
 
In order to find out which strategies and priorities CFOs are...
 
Even as British stocks took a plunge and the pound sterling...
 
Whether it is convincing companies to build R&D centres, factories, or...
 
Copyright owners have struggled to protect their intellectual property since the...
 
Corus Entertainment is poised to complete its move to acquire Shaw...
 
Executive compensation is considered to be a central component of corporate...
 
Open source was established around the ethos of sharing and collaboration....
 
In December last year, a privately owned aerial drone crashed into...
 
By Gregory Richards A recent study by McKinsey Global Institute suggests...
 
Last week the Wall Street Journal, citing anonymous sources, reported that...
 
Written by Donald Farmer Too often, we base Business Intelligence today...
 
Written By Chris Brown To deliver results that senior executives value,...
 
Written By Jason McNaught Contrary to what you may have heard,...
 
Written by  Gail Vallance Barrington Anyone who has commissioned a program...
 
“Public institutions are the cornerstone of our democratic system” is the...
 
In late July, Amazon startled investors with the tiniest of profit....
 
A neuromarketing study examines exactly how much life direct mail continues...
 
As one of the U.S. Defense Department’s largest acquisition organizations, Program...
 
Many people say that managing projects is all about managing people...
 
Some of us can only dream of being 20 years old...
 
“With SMARTnership, we have to look into communication, being trustworthy, convincing...
 
Wreaths are placed at the naming ceremony for the new Canadian...
 
Barry Shepherd, the principal surveyor and client support manager for Central...
 
In 2012, the province of Prince Edward Island held a business...
 
The challenges city leaders now face require creativity and innovation. Many...
 
Depending on how you count, 10-20 percent of all Canadian public...
 
In a 2011 white paper published by the Internal Federation of...
 
For the last few years, governments around the world have been...
 
Compensation is often raised as a key tool that can either...
 
The Canadian mining industry is responsible for over 4.5 percent of...
 
Governments throughout Canada are facing a number of challenges, from reducing...
 
Since its founding, Canada has looked either east to Europe or...
 
It is a good management practice to review programs and activities...
 
Few things catalyze infrastructure faster than a major international sporting event....
 
What can you say about the future of long range public...
 
In Canada, it seems like any discussion of copyright quickly turns...
 
We live in a time when physical and digital infrastructures built...
 
How are leaders responding to a competitive and economic environment unlike...
 
We live in times of significant demographic and technological transition across...
 
Public-private partnerships (P3s) have become increasingly important in Canada at both...
 
Les citoyens souhaitent expliquer aux politiciens et aux décideurs ce qu’ils...
 
The need for better accountability has led Treasury Board to enforce...
 
It begs the question: Are federal real property professionals ready to...
 
With an annual deficit of $36.2 billion, the federal government is...
 
It now appears that Canada will emerge earlier than expected from...
 
Strong portfolio management is increasingly important in today’s interconnected world....
 
Early in 2011, the National Quality Institute (NQI) board of governors...
 
The Public Service Modernization Act, which came into force in 2005,...
 
In the current economic climate, the finance function role in the...
 
We live in exciting times: an unprecedented level of innovation is...
 
Saskatchewan’s oil and gas sector is booming, and the amount of...
 
The Economic Action Plan showed how much can be achieved when...
 
Public Works and Government Services Canada has a new and innovative...
 
Citizens may not always look forward to applying and paying for...
 
Maintaining and investing in water and waste water treatment facilities, roads,...
 
Stakeholders and media are currently focusing substantial attention on executive compensation....
 
The spectre of wrongdoing within a department can send chills down...
 
Il n’y a pas si longtemps, les Beatles chantaient : «...
 
The Beatles once sang, “You say you want a revolution? Well,...
 
An idea – that’s where it all starts. Entrepreneurs travel a...
 
The Commission on the Reform of Ontario’s Public Services, or the...
 
Quote of the week politicians provide the energy generated by ideology,...
 
Some title Some author
Some excerpt
 
Some title Some author
Some excerpt
 
Some title Some author
Some excerpt
 
Some title Some author
Some excerpt
A Globe and Mail journalist made an interesting observation of trade...