BoE chief warns cabinet of promise and pitfalls of Brexit
AFP – Britain could expect an economic boost under the government’s preferred Brexit plan, while house prices could crash without an EU divorce deal, Bank of England (BoE) governor Mark Carney has reportedly warned.
Addressing Prime Minister Theresa May and her cabinet Thursday, Carney argued the British economy could expect a £16 billion ($21 billion, 18 billion euros) rebound if an agreement emerges based on her current plan, according to The Financial Times.
May envisages a post-Brexit free trade area with the European Union in goods and agri-foods, based on a common rulebook, but has faced a furious backlash over remaining tied to the bloc from Brexiteer members of her own Conservative party.
The EU has also cast doubt on whether it can accept key elements of the plan, leaving May struggling to chart a viable path forward.
But Carney painted a bleak picture for the British economy in a no-deal scenario, telling ministers house prices could drop by 35 percent over three years, as sterling plummeted and the BoE was forced to hike interest rates, UK media reports said.
The stark warning comes as the head of Britain’s biggest business lobby group said such an exit would be a "hammer blow" to the British economy.
Brexit talks between London and the European Union have stalled for months, prompting rising concerns that Britain could crash out of the bloc in March 2019 without an agreement.
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 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 spoke Thursday after department chain John Lewis posted a 99-percent plunge in half-year profits.