The possibility of a no-deal Brexit is “uncomfortably high” and “highly undesirable”, Bank of England governor Mark Carney has told the BBC.
Mr Carney said the prospect of the UK leaving the EU without a deal was “a relatively unlikely possibility, but it is a possibility”.
He said it was “absolutely in the interest” of the EU and UK to have a transition period.
Critics poured scorn on the comments, calling them part of “Project Fear.
Mr Carney’s warning came ahead of Theresa May’s meeting with French President Emmanuel Macron at his summer retreat on a small island off the French Mediterranean coast.
The prime minister is cutting short a holiday in Italy as she continues to seek support among European leaders for her Brexit plans.
The Bank governor told the BBC that the financial system was robust and could withstand any post-Brexit shocks.