Sunday 15 September 2019

Apocalyptic Brexit outcome if no deal - Bank of England

Warning of pound collapse and property price crash

All smiles: UK Prime Minister Theresa May (left) with Brexit Secretary Stephen Barclay and Pensions Secretary Amber Rudd in the House of Commons yesterday. Photo: PA
All smiles: UK Prime Minister Theresa May (left) with Brexit Secretary Stephen Barclay and Pensions Secretary Amber Rudd in the House of Commons yesterday. Photo: PA

Kevin Doyle and David Chance

An apocalyptic outcome involving soaring inflation, property price crashes and a devalued pound awaits if the UK leaves the European Union without a deal.

Separate assessments from Whitehall and the Bank of England have painted a grim picture of the impact of a no-deal Brexit on the UK economy.

The Bank of England warned of a devastated, stark post-Brexit era unless a transition period is in place.

As Prime Minister Theresa May desperately struggles to gather support for the only deal on the table, Bank of England governor Mark Carney said the UK is "not fully prepared for a cliff-edge Brexit".

The Bank analysed various withdrawal scenarios to find that a disorderly, no-deal exit would led to widespread chaos for consumers.

As part of the deepest recession in a century, the report says the pound would fall by 25pc to less than parity against both the US dollar and the euro.

The unemployment rate would rise 7.5pc, inflation would surge to 6.5pc, while interest rates would rise as high as 5.5pc.

House prices are forecast to decline 30pc and commercial property prices are set to fall 48pc.

Meanwhile there were warnings that the economy of Northern Ireland will be 9.1pc smaller in 15 years' time in the event of a no-deal Brexit.

In the government paper which laid out its economic scenarios for Brexit, all of them showed that the UK's, and Northern Ireland's, economies would be smaller than they would have been had the country stayed in the EU.

Torpedo

DUP leader Arlene Foster has threatened to torpedo Mrs May's deal with the European Union, which the government paper said would cause the least economic damage of all the options on the table.

Under a no-deal exit, the UK economy as a whole would be 7.7pc smaller, the paper said.

"For example, the manufactured goods sector group is particularly affected in the modelled no-deal scenario and the analysis indicates that Northern Ireland, Wales and Scotland would all see sizeable reductions in their level of economic output," it said.

But Brexiteers and opponents of Mrs May say the studies are part of a new 'Project Fear'.

Mrs May accused Jeremy Corbyn's Labour party of wanting to "cause chaos, frustrate Brexit [and] overturn the will of the British people" by backing a fresh vote in what she said would be "a betrayal of the many by the few".

It comes as Taoiseach Leo Varadkar again warned that the only options facing the House of Commons were the current deal or no deal.

He denied such statements were part of an EU strategy to play hardball with the UK.

"Both the European Union and the United Kingdom accept this is the only deal. We say that because we spent 18 months trying to negotiate it. It was very difficult to negotiate. It is the deal on the table," he said.

Dislike

The Taoiseach said he understands that some MPs don't like the deal because they want to remain closer to the EU, and others dislike it because they want a "clean break".

"I don't believe any of those solutions would carry a majority in parliament. They certainly wouldn't carry the support of 28 states.

"This is the reality of the situation we are in. This is the deal that took 18 month to negotiate," Mr Varadkar said.

Irish Independent

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