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Bank of England warns of house price plunge in no-deal Brexit

Mark-Carney-with-bank-note-in-background-700.jpgBank of England governor Mark Carney has warned the government about the potential economic ramifications of crashing out of the EU with no deal.

According to the Financial Times, Carney has warned such an exit could lead to a property crash resulting in house prices falling by a third.

The governor told Cabinet ministers that in the event of no-deal the bank would not be able to cut interest rates, which it did after the result of the Brexit referendum in 2016. He says unemployment and inflation would rise.

Carney, who this week committed to extending his term at the bank until 2020, warned ministers that house prices would be 35 per cent lower three years after a no-deal Brexit than would otherwise have been the case.

He said this would be driven by increasing unemployment, higher interest rates, depressed economic growth and higher inflation.

The FT reports Carney saying that if the government agreed a deal based on the recent exit-plan presented at Chequers then the economy would outperform current forecasts because it would be better than the bank’s assumed outcome.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. No doubt the ‘Rule Britannia Mob’ Will classify this yet again as ‘Project Fear’. Ostriches by comparison are far sighted.

  2. Harry, ostrich eyes are so big that each is bigger than its brain. Bearing in mind the size of their skulls, this leaves them with a very small brain; in fact they are so stupid that, while they can attain high speeds, they tend to run round in circles and are thus easy prey. So are you saying that Mark Carney is an ostrich?! Seriously, and this goes for both sides of the argument, the public deserves a thorough, non-partisan assessment of the choices before them which takes into account the needs of (manufacturing and service) industries and the communities within which they operate – and these do conflict sometimes. I have yet to hear anyone, and that especially includes MC, who has yet squared that circle.

    • Believe it or not Chris I have nothing special to gain from the result either way. Yes, I am partisan. Who on earth cannot be? However I do really believe that I (and no doubt everyone else – apart from the really rich such as Reece Mug) will be worse off as a result of us leaving. Worse off financially, politically and socially. Our government (and the opposition) seem to be hell bent on making the UK and international pariah.

      I wonder how long it will take Scotland to go independent?

  3. No deal would be an absolute disaster in the short term at least. It’s not project fear that’s just the facts but hopefully the EU will also realise it’s bad for them as well not least the money owed to them let alone the jobs dependent on it.

  4. Perhaps we should judge his predictions on his past record in the matter. Usually he his diametrically wrong.

  5. for the next 30 years or more, every time there is some type of major down turn in markets of any type, poor brexit will be blamed.
    If he is correct and house prices do drop it may or may not be due to brexit. Nobody knows for sure the reason why – it may have happened anyway (or it may not). How many commentators have been saying for years that uk house prices are far to expensive????? All of them, and they are correct. If prices do drop then all of a sudden it opens up opportunity so hundreds of thousands can get onto the property ladder. I personally don’t see this as a bad thing.

  6. Why does he not keep his counsel until the deal is done? He has never said anything that has eventually happened and staying on until 2020 is laughable. Are we saying that ther is no British person capable of leading the BoE? Scandalous

  7. Well that’s a slap in the face to all the Millennials that voted to remain, but can’t afford to get on the property ladder. If only they’d known this before the vote…
    Well I think he’s either being paid to preach this to keep the £ low and to help exports, or (like every other Remain voter over 30 I’ve met) he’s still got the hump that his ‘Retirement in the South of France using an E111 for free healthcare’ is up the swanny.

  8. House prices are driven by supply and demand and there’s been talk of a correction for the past 25 years. Is a no-deal Brexit really likely to cause higher inflation and unemployment? Even if it does, are such consequences really likely to cause house sales to stagnate (asking prices never fall overnight), with sellers eventually having to lower their expectations to attract buyers? They may, but I wouldn’t bet on it. All we can do is wait and see.

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