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Pound could crash and economy shrink under no-deal Brexit, Bank of England warns

The UK economy could shrink by 8%, Bank of England Governor Mark Carney has said.

Bank of England Governor Mark Carney
Bank of England Governor Mark Carney
Image: PA Wire/PA Images

THE BANK OF England has warned that a no-deal Brexit would trigger a financial crisis in Britain and that the pound could plunge by 25%.

Speaking today, Bank of England Governor Mark Carney said that- in the event of no transition period between the UK leaving the EU – Gross Domestic Product could shrink by 8% and that unemployment could nearly double, while house prices could fall by almost a third.

A recession on that scale would be Britain’s deepest in modern history and far beyond the one experienced after the global financial crisis a decade ago, the bank has said, under its forecast for a “disorderly Brexit.”

The bank assumed a number of worst-case scenarios in its prediction, including the imposition of tariffs and other barriers to trade on all trade with the EU.

The Bank’s analysis comes after Chancellor Phillip Hammond said that the UK will be worse off after leaving the EU than if it had stayed in – regardless of what sort of trade deal it manages to strike. 

British Prime Minister Theresa May is currently on a national tour around Britain in an attempt to drum up enthusiasm for the Brexit deal she reached with EU leaders on Sunday.

May crowned 17 months of talks with Brussels by sealing Brexit arrangements with the 27 other EU heads of state and government.

The European Council agreed with the progress made so far in the 500-page Brexit deal – which includes specific provisions to avoid a hard border in Northern Ireland – and also endorsed a 26-page document on the future relationship.

May has repeatedly said that the deal on the table from the EU is the best deal available for Britain. But it has been met with fierce opposition in the UK, both from her own party and opposition figures.

With reporting from AP

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