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Carney says no-deal damage could be less than feared

Mark Carney 480Bank of England governor Mark Carney has said that previous estimates could have overstated the damage that may be caused by a disorderly no-deal Brexit.

Three months ago, the Bank said that, compared to Theresa May’s deal for leaving the EU, a hard Brexit could leave the economy between 4.75 and 7.75 per cent smaller after three years.

However, the Times reports comments made by Carney yesterday that contingency plans that have been put in place could take between 2 and 3.5 percentage points off those values depending on the form of hard Brexit, whether “disruptive” or “disorderly”.

Accounting for the likelyhood of significant border issues, depressed markets and a fall in the value of sterling come March 29, the revised figures still mean that no-deal could cut 2.75 per cent off GDP compared with the government’s deal – equating to £55bn over three years.

Speaking to the House of Lords economic affairs committee, the Times reports Carney stressed that no-deal Brexit would still cause “a material economic shock” despite the contingency moves that had been made.

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Comments

There are 14 comments at the moment, we would love to hear your opinion too.

  1. The hard brexiters might try to take some succor from this. If they do I would remind them that a few months ago they said Carney didn’t know what he was talking about.

  2. If this is good news I’d hate to see what you consider bad news. A shrinking economy of between 4.75% to 7.75%. Even the best estimate of 2.75% looks dire. I wonder how this compares to the forecasts for other economies over the same period. Or indeed what these figures would look like if in theory we remained in the EU.

    So folks those who voted leave in fact voted to get poorer. I do find that very odd.

    • Some are brainwashed by populist politics,some just dislike foreigners and some are, surprisingly in this day and age, still impressed by anyone that looks and talks like a Toff (Rees-Mogg).

      I heard a member of the public, on Radio 5 Live a couple of months ago, saying she knew what she was doing when she voted leave. When asked why she still wanted to leave she said it was because she had never seen a photo of the man that runs Europe.

      Answers on a postcard.

      • Patrick, I think you might have missed that, rather than not being the sharpest tool in the box which is what you appear to be implying, the Radio 5 contributor was cleverly alluding to the unelected cadre (or cabal depending on your views!) that is running the show.

  3. Trevor Harrington 6th March 2019 at 11:18 am

    Above two comments …

    Harry and Patrick,

    I see you have succumbed to the “remainers” negative (and completely erroneous) view that we are not the fifth largest economy in the World after all, and looking two to five years out we will not have an expanding economy with our own abilities to trade with the expanding Wold, and the now massively developing and expanding Asian markets, and quite obviously we are incapable of driving our own economy without the assistance of the socialist liberal republics on the continent, none of whom are elected through a proper democratic system.

    Indeed, you are obviously happy to ignore the fact that last year Germany, for a period of about six months, was run by an unelected dictatorship, and that they do in fact control the EU, particularly since they have accumulated all the Euros to their own banks and economy, and I see no likelihood of then spreading that wealth to the poor nations on the Mediterranean coasts. If you study your history, do you see any familiarity ?

    Europe’s President is only elected by themselves, rather than the people, and the current one seems to be rather too old for the job, he has no grasp on the reality of their economies in comparison to the UK, and worst of all, he seems to have an alarming addiction to red wine.

    The Euro itself is toast, and will cost the attaching countries very dearly indeed, as indeed it has already, due to the defaulting Greek economy, who incidentally represented less that 1% of the total European economies. Italy and or Spain cannot be accommodated in the same way as Greece was, when they decide that they too have had enough.

    It was only a few short years ago that we were told by the same people who would have us remain now, that we must join the Euro or else we would become an economic backwater – I suggest that you should now thank your own god that we did not join in with that little bit of idiocy.

    As far as Europe as a political and economic union is concerned, I would simply point out that over hundreds of years, when France gets into bed with Germany, it is initially all love and kisses, and it is only when one of them decides to get out of the matrimonial bed that all hell breaks loose – there is nothing different on this occasion.

    My youngest daughter had the most telling and sensible way of looking at the referendum vote of two years ago – she said “if we were not members of the EU now, and we were being asked to vote whether to join it or not – well – looking around at the current European circus … you really would not do so would you!”.

    What patently obvious common sense …

    Now then boys, please do not tell me that I should re-examine my voting views on Europe until you have inserted some common sense, and realism into your own.

    There nay well be some disruption for a short period, possibly even a year or so, but after that we will be back where we should be … as a leading political and economic force in the World again.

    I just hope to all our Gods that the French and Germans manage to dismantle it all in due course, without doing something really silly …

    • I’m really sorry that you spent so much time and effort on your work of speculative fiction, Trevor. I don’t think it will be a best seller but you might have a few buyers from the Moggites and the lady who was on Radio 5 Live.

      • Trevor Harrington 6th March 2019 at 1:21 pm

        Patrick,

        I am sorry that you could not enter any constructive or counter dialogue in an effort to try and prove your stance … preferring to resort to what you presumably see as a clever insult.

        I would simply add some advice for you :-

        “there are none so blind as those who refuse to see.”

        Have a good day Patrick.

        • I do have work to do, Trevor, and am a totally one man band, which is a disaster nowadays but, hopefully, retirement beckons.

          I did think I had said it all, though. I think your post is virtually, if not complete, speculation on the future. I know what we have with the EU and I am happy with it. If we can make useful changes, in the future, along with other countries in the EU that would be great.

          Nothing stays the same forever.

          Sorry my first post sounded curt. I’m always rushing.

          Best regards

          • Trevor Harrington 6th March 2019 at 5:35 pm

            Patrick,

            That is better.

            Being a “one man band” is not a bad thing at all, making assumptions about another practitioner is a bad thing – I am also a “one man band”.

            Time is the only thing of any true value that we have to offer each other, and interestingly it is the exact same LIFETIME VALUE from one person to the another.
            I am happy to have received yours – thank you.

            The points I made in my original piece (a bit wordy I am afraid – sorry about that) are for the large part factual, true and correct.
            Some parts are of course speculation, simply because they have not happened yet.

            The part about Germany and France falling out with each other are indeed speculation, but tragically they are in fact historically accurate. I do indeed hope that it does not happen again, although I would have to say that politically and economically they are heading in precisely that direction.

            Our borders with Ireland are ours and none of their business. They can do just what they like with their side, and we will do whatever is necessary with ours – if they insist on making it a hard border then we will have to do the same.

            The point is that contrary to that depicted in journalistic political bias (BBC), it is THEY who are making it a hard border NOT US. If they want to put protectionist tariffs on cross border goods and services, we shall simply have to do the same. Even President Trump has learnt that lesson with China in recent weeks.

            Likewise with Gibraltar. It is ours, and all the legal treaties and documentation say that it is ours. The most important point, which they are all (Europeans) conveniently ignoring, is that the Gibraltarians have voted virtually unanimously in recent times, that they are BRITISH and that they are most definitely NOT Spanish (Argentina – Falklands – ring any bells).

            When the Europeans (ergo Germany and France) start talking in the same acquisitive way about the Alsace, or the Sudetenland, then we really are in a nasty place.
            Sadly, I happen to believe that it will happen in due course …

            In the meantime, we have agreed to give them lots off money, provided that they give us a trade agreement – they have NOT done so. We have even agreed to extend to December 2020 to give them time to arrange a trade agreement, and they seem to think that this is doing us a favour.

            We import roughly 5 times more value from Europe (some say 8 times more value) than that which they import from us. If they are going to put tariffs on our trade going into them, just where do you think that we might raise that money ?

            Bingo – a trade war – with some territorial stuff thrown in for good measure.

            The solution is a proper and accurate realisation in the Countries concerned, of where they are really at and it ain’t in the nicey-picey European la-la Land, where Germany has all the trade and the money (Euros) which they have gleaned from the unfair systems and trade imbalances inherent in the creation of the Euro (11.6 French Francs to the Pound Sterling – I don’t think so).

            Having a single currency with absolutely no control over the individual Government borrowing was lethal, and conned those Countries into massively profligate spending, which they could not afford, and in the end only benefited German industry manufacturing and exports to them (just look at the taxis – they are all German made).

            The Euro is toast, and if Germany cannot be brought to see that they must find a way of passing their ill gotten gains back to those Bankrupt Countries from whom they have taken it, then at some point in the future the huge national debts can only be dealt with by defaulting. If, as was previously the case in the 1930s, they then start sequestrating assets and land from those countries … well, I think you can see where we are going, and the similarities of relatively recent history.

            We need to be out of it, for lots of reasons, both political and economic, and for reasons of national preservation.
            We told them – NO FEDERAL EUROPE … but they did not listen.

            Sorry, not nice is it?

    • Julian Stevens 6th March 2019 at 5:00 pm

      I am of the same opinion as your daughter and have asked that very question on various forums. To my knowledge, nobody has yet said: Ooh, yes, I would.

      Apart from anything else, the EU bears scant resemblance to what the UK signed up to 45 years ago and our biggest mistake was not insisting on a five year rolling opt-out clause.

  4. Mark Carney’s latest forecast confirms the modern trend to take a hypothetical set of factors, all of which can be variable but are deemed not to be in this instance, and present a (usually extreme) scenario with no caveats. There is no effort to provide balance and perspective, to show how the effect and interaction of any variance with the criteria being used. Never has it been said more truly that forecasters use statistics much like drunks use lamp posts – more for support than illumination!

    More seriously, Patrick I trust that the laziness of your stereotyping of complete strangers who have different views to yourself is not echoed in your dealings with clients. Don’t forget, when you are pointing the finger at other people there are three on the same hand pointing right back at you. In plain language, your comments make me wonder whether you are equally guilty of what you are accusing others of.

    • You think I was stereotyping the woman that hadn’t seen a picture of who is running the EU, so wanted to leave? That was what she said! If that makes good sense to you then that seems odd. I merely told you what she said. Mind you, it makes a change from “just get on with it”.

      I’m not sure where I was being lazy but…what do you think I was accusing people of, that I might be guilt of myself?

      • Patrick, I thought you might struggle with this. Read the first paragraph of your first post which made some quite extreme assertions. Ask yourself how many people you know who voted to leave satisfied the criteria therein. Then ask whether it is a sufficiently large sample to pin that stereotype on the other 17 million Leave voters. Incidentally you will note that my comments have deliberately not taken one side or the other, they are more to do with the tone and lack of intellectual rigour – we are not point-scoring politicians after all!
        With regards to the Radio 5 listener, either of our views could have valid but, for many voters, the fact that there is unelected elite in Brussells is galling because, at least, there is the chance that we can turf out our numpties! Just perhaps that is the soundbite she was trying to create?
        Have a good day.

  5. Interesting interview on Aviva website with Ashoka Mody:
    https://www.avivainvestors.com/en-gb/views/aiq-investment-thinking/2019/02/future-of-the-euro-zone/
    He basically states that:
    1. It is inevitable that Italy will have a financial crisis.
    2. It is too big to bail and there is not much the EU can do about it when it arrives.
    3. The Euro is doomed in its current format.
    4. Europe is a declining continent due to lack of innovation.
    This last point is particularly striking when you consider that the UK has attracted 40% more Tech sector investment since 2011 than France and Germany combined; and a report out yesterday confirmed that UK universities are ranked No 1 in 13 separate subject areas (up from 10 last year) compared to the rest of the EU27 that managed a total of 7 subject areas between them (and not one from France or Germany!).
    The future is what we make of it – but if we remain in the EU it will be constrained by what they want to make of it!

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