Brexit: Bank of England warns of mega recession

In the opinion of the Federal Reserve, a Brexit disorder would hit the UK economy more than the recent financial crisis. In an exit scenario from the EU, the Bank of England (BoE) badumes that economic performance will be in a year 's time. eight percent decrease. In comparison, in the financial crisis, it was 6.25%.

The economic slowdown is due, among other things, to two things:

• the dreaded effects of traffic jams at customs offices
• and a loss of confidence in the markets.

the unemployment Given the decline in growth, the BoE believes that this should increase significantly. The central bank also expects strong reactions in the financial markets. So, the pound should 25 percent give in to the dollar. The substantial decline in the pound should bring the inflation rate to 6.5%. The central bank would then be forced to raise its key rates. In peak, the key rate could reach 5.5%.

However, the central bank does not consider this chaos scenario to be the most likely variant. Nevertheless, she considers that "Plausible" and called on the country's banks to take the appropriate precautions. "The UK banking system is powerful enough to continue serving households and the economy even in case of disorderly Brexit," writes the BoE.

The central bank had examined the capital of seven banks:

None of the banks would need new capital, even if they had to go out of order.

Government warning

The UK government has negotiated a divorce agreement with the EU. If the plan, which is also the subject of controversy in the government camp, pbaded to Parliament, it would serve as a basis for a Brexit ordered at the end of March 2019. transition Britain will remain in the Customs Union for the time being, until the definitive relations between the two sides are clarified.

Federal Reserve Chairman Mark Carney and Treasury Secretary Philip Hammond have always emphasized the importance of such a transition phase. It would give the United Kingdom a Brexit chaotic sparelikely to pose major problems for the economy on both sides of the Channel. The government of the Prime Minister, Theresa May, had already warned of the consequences of a messy Brexit.