Carney rejects Boris Johnson's no-deal trade claim

The Bank of England governor, Mark Carney, has said that the UK would be hit automatically by tariffs on exports to the EU in a no-deal Brexit, rejecting a claim made by Boris Johnson that this could be avoided.

Tory leadership candidate Johnson said this week that tariffs would not necessarily have to be paid if the UK left the EU without a deal because the UK could rely on article 24 of the general agreement on tariffs and trade (Gatt).

Some Brexit supporters have claimed that the Gatt, a treaty under the auspices of the World Trade Organization (WTO), would allow a “standstill” in which tariffs are avoided, even in the absence of any agreement on trade.

Many trade experts say this is not the case without agreement from both sides. Carney cited the head of the WTO and Liam Fox, the minister for international trade who backed the Vote Leave campaign in 2016, to contradict Johnson.

Talking to the BBC, Carney said: “Gatt 24 applies if you have an agreement, not if you’ve decided not to have an agreement or have been unable to come to an agreement.

“Not having an agreement with the EU means that there are tariffs automatically because the Europeans have to apply the same rules to us as they apply to everyone else. If they were to decide not to put in place tariffs they also have to lower their tariffs with the United States, with the rest of the world. And the same would hold for us.”

The Bank’s governor has been an outspoken critic of Britain leaving the EU without a deal. However, Johnson has repeatedly said the UK must leave on 31 October, whether a deal is agreed or not.

Carney said on Friday that as many as 150,000 British businesses did not have the paperwork in place to export to the EU in the event of a no-deal Brexit. Around 40% of 250,000 exporters were prepared, he said.

For businesses importing to the UK, Carney said that there was only a “very short-term level of preparation” in the form of stockpiles of goods and materials. These would only last “weeks”, Carney said, highlighting sectors such as the automotive manufacturing sector.

He said: “No deal means no deal. It means there is a substantial change in the trading relationship with the European Union.”

Carney is set to serve as governor until 31 January 2020, meaning he will serve under the incoming prime minister. Johnson won every round of voting among Conservative MPs as they chose the final two candidates to be the party leader.

Conservative party members will choose between Johnson and Jeremy Hunt, the foreign secretary, in a vote next month.