Brexit: Bank of England boss Mark Carney warns no deal outcome will mean higher prices and 'disruption to trade as we know it'

Theresa May urged to “do all things to avoid it” – just hours after No 10 again insisted she will crash out of the EU with no agreement if necessary

The Bank of England governor says a no-deal Brexit will mean higher prices and “disruption to trade as we know it”, in a stark warning of the impact on the country.

Mark Carney urged Theresa May and other governments to “do all things to avoid it” – just hours after No 10 again insisted she was ready to crash out of the EU with no agreement if necessary.

He also likened his efforts to stabilise the financial system for the huge shock to the stockpiling of food and medicines, saying: “We have already done the stockpiling.”

Banks were ready for house prices crashing by a third, interest rates soaring by more than 4 per cent and the economy going into recession – the worst case scenario.

Speaking ahead of the prime minister’s meeting with Emmanuel Macron, the governor described a no deal outcome as “highly undesirable” – but warned the chances were “uncomfortably high”.

Mr Carney also highlighted the pain already inflicted by the vote to leave the EU, saying: “We have gone from the fastest to the slowest growing [economy] in the G7.”

The UK economy had “grown by a percentage point less up to spring of this year than we had projected prior to the referendum”, he said – with a “real pay squeeze on British households”.

The interview came before Ms May is expected to issue a “Chequers deal or no deal” message to the French president when they meet at his summer retreat in the south of France.

The prime minister has cut short her holiday in Italy to try to convince Mr Macron that the UK will not compromise further on the proposals thrashed out by the cabinet in June.

In recent days, senior ministers have talked up the prospects of a no-deal departure insisting Britain can still “thrive” – although Downing Street has declined to use that word.

But Mr Carney set out a very different immediate future when asked about leaving with no agreement, saying: “It is highly undesirable. Parties should do all things to avoid it.”

Asked on BBC Radio 4 what it would mean for people, Mr Carney highlighted “disruption to trade as we know it”, adding: “As a consequence of that, a disruption to the level of economic activity, higher prices for a period of time.

He described the bank’s job as trying to prevent problems reverberating through the financial system, to ensure people did not “have things to worry about”.

“What we don’t want to have is people worrying about their money in the bank, whether or not they can get a loan from the bank – whether for a mortgage or for a business idea,” Mr Carney explained.

“And we have put the banks through the wringer well in advance of this to make sure they have the capital.”

Ahead of the two leaders’ meeting, an Elysee Palace ruled out Mr Macron breaking ranks to help the UK, insisting the meeting was “not a negotiation” and “not a substitute for the negotiations” led by Brussels.

The spokesperson said the president had full trust in the EU’s chief negotiator, Michel Barnier, adding: “That’s how it will remain.”