The long-term economic consequences of a no-deal Brexit will be worse than those of the pandemic, the governor of the Bank of England has warned.
Andrew Bailey said failing to reach a compromise in the coming days will be worse than the long-term hit of the current crisis.
As Britain heads out of the latest lockdown, and amid warnings only a minority of businesses are ready to leave the EU, Mr Bailey said the effects of leaving on World Trade Organisation terms would be dire.
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He told MPs on the Treasury Select Committee: “I think the long-term effect would be larger than the long-term effect of Covid.
“The models would suggest that the effects of a WTO no-deal trade agreement are longer term.
“The reason for that is that it takes a lot longer period of time for the real economy to adjust.”
But he stressed, in the short-term, the hit from Covid – with two lockdowns, thousands of businesses lost and a vast number of companies and workers on Government life-support – would be worse.
The Bank of England’s chief economist Andy Haldane said that around two-thirds of latest losses were being clawed back by the economy.
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Mr Haldane told the committee that the vaccine announcements from AstraZeneca and rivals Pfizer and Moderna, were “extremely good news for the economy”.
He said that the extension of the furlough scheme, which covers big chunks of workers’ salaries to keep them on payrolls, was a positive.
It has also been announced that with Brexit travel restrictions of one form or another coming in in five weeks’ time, travellers arriving in England will be able to end their quarantine period with a negative coronavirus test after five days from December 15.
Under the new rules, passengers who arrive from a destination not on the Government’s travel corridors list will still need to enter self-isolation.
But they can reduce the 14-day period by paying for a test from a private firm on or after day five at a cost of £65-£120.
Results will normally be issued in 24 to 48 hours.
This means people could be released from quarantine six days after arrival.
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The change does not apply to people arriving in Northern Ireland, Scotland or Wales, who must continue to self-isolate for 14 days.
Transport Secretary Grant Shapps said: “We have a plan in place to ensure that our route out of this pandemic is careful and balanced, allowing us to focus on what we can now do to bolster international travel while keeping the public safe.
“Our new testing strategy will allow us to travel more freely, see loved ones and drive international business.
“By giving people the choice to test on day five, we are also supporting the travel industry as it continues to rebuild out of the pandemic.”