Brexit: Bank of England warns against the horrors of a difficult exit from the EU

Mark Carney, director of the Bank of England, is not popular with Brexit fans. Time and time again, the 53-year-old central banker – Canadian national – warns of the potentially serious economic consequences of Brexit. And he rarely takes a paper on his mouth. This is another reason why the Bank of England's Brexit study, released Wednesday, was eagerly awaited.

The wait was worth it. Because the study has everything for her:

Should he be one Untidy Brexit If the country leaves the EU without an agreement or transition period, it could result in a more serious economic crash than the 2008 financial crisis.

• the Gross domestic product fall 8 percent next year,
• the Real estate prices could yield about a third,
• the British books could lose a quarter in value,
• the unemployment could almost double from 4.1 to 7.5 percent
• and it could be a inflation 6.5%.

The Brexit agreement negotiated by the government with the EU, on the other hand, could lead to modest growth in economic growth. But only if the United Kingdom maintains close trade relations with the EU. According to the study, growth of 1.75% would then be possible.

On the other hand, an agreement in which there would be no hard border between Northern Ireland under British administration and the Republic of Ireland, but customs controls between Britain and the United Kingdom. 39; EU, could result in a contraction of the economy of 0.75%.

The crisis could worsen because up to now, only a fraction of UK companies have prepared for a hard Brexit. "In some cases, it is very difficult for these companies to prepare for frictions at the border," said Carney at the presentation of the report.

In any case, Britain would be worse off in each scenario studied than if it remained in the EU, the study continues.

At least one good news that Carney was ready: the Bank of England and the country's seven largest banks are expected to survive even the toughest crash of Brexit. This resulted in a stress test.

When asked if Carney's explanation was not scary, he replied, "Our job is not to hope for the best, but to prepare ourselves for the job." worst." The conclusions of the study are all "worst" scenarios.

The government also warns against a Brexit without agreement

However, the Bank of England's report was not the only study to warn of the potentially serious consequences of the brexits without agreement that day. The government concludes in a study also published Wednesday that Britain will come out worse with an imaginable Brexit scenario than if it stayed in the EU.

The government recognizes that Brexit will certainly have a negative impact.

According to the study, the gross domestic product would be reduced by 7.7% by 2035 if Britain left the EU without agreement. If EU citizens did not come to work in the United Kingdom (a sincere wish of many Brexit supporters), the gross domestic product would fall by 9.3% – that would be the worst case.

If Britain followed the Norwegian model and joined the European Economic Area, it would have a negative impact on gross domestic product of minus 1.4%. With an EU-Canada free trade agreement, the British economy would be at least underprivileged by 4.9%. This is the dream scenario of many Brexit durlists.

The study is somewhat confusing in that it does not explicitly address the Brexit agreement that Prime Minister Theresa May recently negotiated with the EU and for which she is currently doing a lot of work. promotion. The study is rather based on a proposal that is no longer topical, Mays, for a summer agreement on Brexit. It says in his remarks, but that the current Brexit agreement would probably result in a gross domestic product of 3.9% lower than the EU membership.

Chancellor: Brexit leads to losses

British Chancellor Philip Hammond acknowledged that Brexit would likely lead to losses. "It is true that if we only consider the economic benefits, the result would be slightly better if we stayed in the EU," he told the BBC. But the deal that May has negotiated with the EU is "remarkably close" to stay in the EU.

The timing of the government's submission should not be totally arbitrary. Because Theresa May travels the country and promotes the nearly 600-page divorce agreement and the 26-page political declaration she brought from Brussels. So she obviously wants to put pressure on the MPs. Because up to now, it does not seem that May has a realistic chance of getting agreement to Parliament.

On December 11, MPs should vote. The opposition as a whole has not only announced its vote against the agreement. In addition, the Democratic Unionist Party (DUP), a regional party in Northern Ireland, whose ten MPs depend on the May government, is considering voting against the agreement. But above all, May threatens to create unrest in his own ranks: more than 90 Conservative MPs have announced their intention to vote against the deal.

Brexiteers are not amused

As might be expected, Brexit critics immediately put the warnings of both studies on the wind. Former Brexit Minister David Davis, for example, described the study as "Project Angst 2.0". In a speech to the pro-Brexit "Economists for Free Trade" group, Davis said: "In a desperate attempt to reverse the results of the 2016 referendum, we will certainly hear the most abrupt and unlikely predictions" .

The Bank of England's study also provoked annoyance. Conservative MP Charlie Elphicke suggested that this could be more of a "political than economic" prediction. Former Development Minister Priti Patel said the Bank of England was undermining "its credibility and independence" leaving so much room for "such predictions and extreme economic scenarios".

The leader of the Brexit supporters of the conservative lower house, Jacob Rees-Mogg, has apparently forgotten that he likes to be a traditional British gentleman. In a radio interview, he complained that Carney was a "failed second clbad Canadian politician" who had destroyed Bank of England's reputation with "hysterical and false predictions".