The EU has more to lose from Brexit than the UK, the Governor of the Bank of England has said as he admitted that Britain's economy will defy his own gloomy forecasts and grow at a faster rate than expected.

Mark Carney conceded that Brexit is no longer the biggest domestic risk to Britain's economy after issuing a series of dire warnings about the consequences of a leave vote in the run up to the EU referendum.

The Bank of England is now “very likely” to improve its economic forecast next month, Mr Carney said as he said he was “surprised” that the economic slowdown that he forecast has not materialised.

He said: "In the run up to the referendum we felt that it was the largest risk [to the economy]. There were a series of things that could have happened that would have had financial stability consequences. Of course having got through the night the day after the scale of the immediate risks around Brexit have gone down."