Bank of England chief warns of housing market crash on ‘no deal’ Brexit
LONDON: British house prices could crash by 35 percent if the UK leaves the European Union next year without a divorce deal, Bank of England governor Mark Carney has reportedly warned.
Sharing the BoE’s worst-case scenarios with Prime Minister Theresa May and her cabinet Thursday, Carney painted a bleak picture for the British economy, according to UK media reports Friday.
It comes as the head of Britain’s biggest business lobby group said a “no deal” exit would be a “hammer blow” to the British economy.
Brexit talks between London and the European Union have stalled, prompting concerns that Britain could crash out of the bloc in March 2019 without an agreement.
Carney reportedly warned that house prices could fall by up to 35 percent over three years in a worst-case scenario, as sterling plummeted and the BoE was forced to hike interest rates.
The central bank’s latest annual “stress test” of the UK financial system, carried out last November, said Britain would be able to cope with a price crash of 33 percent — suggesting that the country may not find itself in as bad a situation as during the financial crisis a decade ago.
Meanwhile speaking to the BBC on Friday, head of the CBI business lobby group, Carolyn Fairbairn, said “the urgency of stepping back from the cliff-edge is growing daily”.
The director general added: “The hammer blow to our economy would be enormous and I think many smaller businesses can’t properly prepare and that just doubles the potential impact if we go over that cliff.
“We have to have a deal,” she insisted.
She hit out also at Brexit Secretary Dominic Raab’s claim Thursday that UK companies should not blame Brexit for poor earnings.
“They have not,” she told the BBC.
“They have actually been getting on with things and what we need now more than anything else is confidence from our politicians in business. The world is watching, and we need that confidence to come from politicians on all sides.”
Raab had spoken Thursday after department chain John Lewis posted a 99-percent plunge in half-year profits.