The Bank of England governor has rubbished a key Boris Johnson claim for avoiding economic damage after a no-deal Brexit, in a severe blow to the Tory leadership favourite.
Mr Johnson dismissed fears about crashing out of the EU by arguing the UK could still enjoy tariff-free trade under what is known as “Gatt 24”, until a permanent agreement was struck. But Mark Carney pointed out the trade law could only be invoked if there was an agreement in place – and the central point of a no-deal Brexit was the absence of a deal.
“The Gatt rules are clear. Gatt 24 applies if you have a [withdrawal] agreement, not if you’ve decided not to have an agreement, or you have been unable to come to an agreement,” he told the BBC.
Threats to the global economy do not come much bigger than a trade war. Tariffs helped turn a stock market crisis and recession into the Great Depression back in the 1930s, scarring the world economy for decades to come.
The key lesson for the best part of the past century was that prosperity flows when borders are open to trade.
So far the trade spat between the US and China has not tipped the world into crisis. That is not guaranteed to continue: IMF chief Christine Lagarde this week warned it is “a threat for the global economy.”
The trade war started at a time of strong economic growth, and central banks around the world have responded with economic stimulus measures, dampening the conflict’s impact.
However, global growth has weakened since then and the current fragile stability could let much of the world avoid a recession, if there are no more shocks.
Yet that could change this week. After months of negotiations, the US looks set to raise more tariffs on Chinese imports.
A quarter of a century ago, in Rwanda, you stood a higher chance of getting flowing blood instead of running water if you opened a tap. That is, of course, if you were in one of the few areas that had access to piped water infrastructure. Elsewhere, poverty, pain and disease festered and the horror of death lurked, awaiting to claim the next victim. And there were many of them! Many stories of the suffering endured during this period are yet to be told in full, and many more will never be told in full for they bring into question the entire concept of humanity itself.
Regardless, a quarter of a century ago, a people decided to defy death, took a stance against an ongoing genocide and fought for freedom, dignity and prosperity. The Rwanda that is familiar in popular imagination today – environmentally clean, economically growing and politically stable – is the result of the sum of all the people who have chosen to be makers of their own history, not bystanders singing redemption songs to a selfish and disinterested international audience. It is a country that has vowed to never again go through the pain and suffering it did, losing over one million lives to ethnic chauvinism. It is also a country that, in building the future it desires, has come under severe criticism at best, and under serious attacks, some of which are – in fact – a threat to national security.
“54 countries with a population no less than one billion marks the creation of the world’s largest economic and free trade area,” International Trade Centre Director, Arancha Gonzalez reacts as the African Continental Free Trade Area is born