LONDON: Bank of England governor Mark Carney warned on Thursday of the risks of leaving the European Union with no deal as the institution lowered its economic growth forecasts for 2019 and 2020.

He blamed Brexit uncertainty and weaker global activity due to trade tensions for the downgrade of projected growth to 1.3 percent in 2019 and 2020, down from 1.5 and 1.6 percent forecast in May.

The central bank's monetary policy committee voted to keep the key interest rate at 0.75 percent.

But the projections assume a "smooth adjustment" to new trading terms with the EU, and Carney noted that since May, "the perceived likelihood of a no-deal Brexit has increased significantly".

Boris Johnson took over as Britain's prime minister last week, promising to deliver Brexit on the next scheduled departure date of October 31, with or without a deal with Brussels.

His finance minister Sajid Javid on Wednesday announced new funds to help the government and businesses prepare for severing ties overnight with Britain's closest trading partner.

But Carney warned that while preparations were vital, "they cannot eliminate the fundamental economic adjustments to a new trading relationship that a no deal Brexit would entail".

"In the event of a no deal, no transition Brexit, sterling would likely fall... it is probable that CPI inflation would rise and GDP growth would slow," he told a press conference.

Fears of a disorderly divorce with Britain's closest trading partner have already sent the pound to a new two-year low this week against the dollar.

A Bank of England survey found that just under a fifth of companies described themselves as "fully ready" for a "no deal" Brexit.

"Despite greater preparedness, businesses still expect their output, employment and investment to fall by around one to three percent over the next year in the event of no deal," Carney said. —AFP