Pro-EU demonstrators protest outside parliament in Westminster London, September 13, 2018. — Reuters pic
LONDON, Sept 4 — The Bank of England believes the impact of a no-deal Brexit on the UK economy is “less severe” than previously thought owing to better preparedness, governor Mark Carney said today.
In a letter to the chair of a cross-panel committee of British MPs, BoE governor Mark Carney said “improvements in preparedness mean that the appropriate set of assumptions to underpin a worst case scenario would now be less severe than those used in the disorderly scenario published in November”.
Rather than a a gross domestic product shortfall of 8.0 per cent, a no-deal Brexit would now result in “an initial peak-to-trough decline in GDP of 5.5 per cent”, Carney said.
Unemployment would meanwhile surge to 7.0 per cent rather than 7.5 per cent, up from a current 45-year low of 3.8 per cent.
Inflation would still soar to 5.25 per cent, but that is substantially less than a previous estimate of 6.5 per cent.
Carney’s update comes after Prime Minister Boris Johnson today proposed holding a general election on October 15 should lawmakers force him to seek a three-month Brexit extension from Brussels rather than carrying out a no-deal exit on October 31. — AFP
