Brexit: Carney makes the property crash warning
The Bank of England governor has warned the cabinet that a chaotic no-deal Brexit would crash the prices of the houses and send another financial shock through the economy.
Mark Carney has met with senior ministers on Thursday to discuss the risks of a disorderly exit from the EU.
His worst case scenario is that home prices could fall about 35% in three years, a source has told the BBC.
The warning echoes some of the Bank’s previous comments.
The Bank of England normally carries out “stress tests” to see if the banking system can withstand extreme financial shocks.
His most recent was conducted in the month of November, when he said that a 33% fall in housing prices could occur in a worst-case scenario.
Several reports have said that the governor of the Bank has also said the Downing Street meeting that the mortgage rates could spiral, the sterling would fall and inflation would rise, and many homeowners could be left in negative equity.
Speaking on Friday in Dublin, Mr Carney said that the stress test is intended to ensure that the largest banks in the UNITED kingdom may continue to meet the needs of the country through “through a disorderly Brexit, however unlikely that may be”.
“Our job, after all, is not hope for the best but plan for the worst,” he added.
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Mr Carney, who has just agreed to stay on as governor of the central bank, up to 2020, has faced strong criticism in the past, with Brexiteers, accusing him of being part of Stay camp.
Kamal Ahmed, economics editor
It seems that the Governor was not providing the Cabinet with a forecast of what the Bank thinks that might happen in the event of a no deal Brexit. He was briefing the Cabinet on what preparations the Bank was doing if this happens, including last November’s stress test.
It was not a prediction.
It was an apocalyptic test on which the Bank deliberately sets the parameters beyond what could reasonably be expected to occur. The big banks have all passed the test, giving you the reassurance that the financial system is able to deal with whatever happens in the next year.
The Governor believes that a “no deal” scenario would be bad for the economy. But not as bad as the headlines of today, which are based on an apocalyptic scenario that is not really forecast to happen.
Read more from Kamal here
In the month of August, Mr Carney has told the BBC that the risk of a no-deal Brexit was “too high”.
That comment prompted a leading Tory eurosceptic Jacob Rees-Mogg to call Mr. Carney, “the high priest of the Project of Fear”, while the former minister Iain Duncan Smith has said that “there is no such thing as a non-deal” and the Bank “struggled to understand how it should work”.
Independent property expert Henry Pryor told the BBC that Mr Carney was “not a prediction of Armageddon, he was not to predict the prices of houses would fall by a third, are only do so that if, for some extraordinary reason of all was to go terribly wrong, the bank is ready.”
But, he warned house prices are likely to fall in the first half of 2019, people postpone the purchase of the midst of the Brexit uncertainty, while the number of sellers, pushed by the death, debt and divorce” would have remained about the same.
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Following the Downing Street meeting, the Prime Minister’s official spokesman said ministers remained confident of Brexit deal, but had agreed to “ramp up” their non-agreement of the schedule.
“As a responsible government, we need a plan for every eventuality. The Cabinet agreed that a no-deal remains an unlikely but possible scenario of six months,” the spokesman said.
The Bank of England declined to comment.
The cabinet meeting was part of a series of non-deal planning sessions designed to discuss the “unlikely” scenario is that the UK leaves the EU without an agreement. After each meeting, the planning works are published on various topics. Cell phones and driving
Thursday, jobs said that the UNITED kingdom, the drivers, you may have to get an international driving permit if you want to use the car in some European countries, after a non-deal Brexit.
The government has said that after March, 2019 “your driving licence may no longer be valid in and of itself” in the EU, in its latest no-deal planning cards.
The cards also warned that Britons who travel in the european union it may be necessary to make sure that their passports have six months to run.
And, in an interview with BBC Political Editor Laura Kuenssberg, Brexit Secretary Dominic Raab said the government was trying to give “reassurance that consumers need” on the issue of mobile phone roaming, but he has admitted that European operators could pass on the costs.
He said: “No, I can’t give a cast-iron guarantee. What I can say is that the government would legislate to limit the ability of roaming charges to be borne by the customer.”