The British economy could retreat by 8% in Brexit without agreement & # 39;

The British economy could retreat by 8% in Brexit without agreement & # 39;

The Bank of England has warned that if Brexit was a step in the deal, the pound sterling would plummet and trigger a deeper recession than the financial crisis.

According to him, the British economy could shrink by 8% immediately after a period of transition, while housing prices could fall by almost a third.

The Bank of England also warned that the British pound could fall by a quarter.

The bank's badysis comes after the Treasury announced that the UK would be in a worse situation under any form of Brexit.

The scenario of this bank does not correspond to what it is waiting for, but represents the worst scenario, based on a "messy Brexit".

The scenario envisions the five-year period after the UK's departure from the EU.

But by the end of 2023, the economy is expected to resume growth.

Useful links Ghana Politics | Ghana celebrity news | News in Ghana

"These are scenarios and not forecasts, they illustrate what could happen and not necessarily what is most likely to happen.

"Taken together, the scenarios highlight that the impact of Brexit will depend on the direction, magnitude and speed of the effect of the reduced opening of the British economy ", said the governor of the Bank of England, Mark Carney.

What's a "messy Brexit"?

The Bank of England has formulated a number of badumptions – and not predictions – about what would cause a disorderly Brexit.

The United Kingdom returns to the rules of the World Trade Organization.

No new commercial agreement is implemented by 2022.

The UK loses all access to existing trade agreements between the EU and third countries.

Serious border disturbances due to customs controls.

Migration goes from 150,000 a year to 100,000 a year.

The Bank of England does not give a probability that this will happen.

What happens during this messy scenario?

The scenarios developed by the Bank of England show that GDP would fall by 8% in 2019 compared to current forecasts.

Growth would resume quickly and the economy would resume by the end of 2023 but would be smaller than it was before.

Unemployment would rise to 7.5%, real estate prices would drop by 30% and commercial real estate prices would plummet by 48%.

Interest rates would reach 4%.

What other scenarios has the Bank of England envisioned?

The Bank has examined three other scenarios.

a "disruptive" Brexit – a UK that retains access to certain trade agreements

what could happen if trade agreements were concluded to give the UK a "close" relationship

what could happen if trade agreements were concluded to give the UK a "less close" relationship

A close relationship is a relationship without customs controls, without regulatory barriers and partial agreement on financial services.

A narrower relationship is one in which customs controls begin after 2021 and other regulatory controls are in place.

What happens in these scenarios?

If Brexit is disruptive rather than disordered, GDP will fall by 3% over five years until 2022, housing prices will fall by 14% and unemployment will reach 5.75%.

If a narrow trade agreement is agreed, the economy could still be 1% lower than that of the UK if it had stayed in the EU, but 1.5% higher than the estimate the most recent of the bank.

If it is less tight, economic growth could be 3.75% less than if the UK had stayed in the EU and 0.75% less than expected compared to the latest report on inflation .

These figures cover the period up to 2023.

Why does the bank publish these figures?

The disruptive and disorderly scenarios of Brexit are included in its six-month review of financial stability.

The tight and less tight scenarios are published at the request of the Treasury Committee of Deputies regarding the impact of Brexit on the ability of the bank to fulfill its mandate to maintain financial stability and contain the risk of bankruptcy. inflation at 2%.

What does this mean for the banking sector?

The Bank of England has submitted seven major lenders to a stress test which, according to it, was two and a half times more severe than the Brexit scenarios.

The seven lenders – Royal Bank of Scotland, HSBC, Barclays, Lloyds, Standard Chartered, Santander and Nationwide Building Society – pbaded the test.

The bank said: "The UK banking system is powerful enough to continue serving British households and businesses in the event of disorderly Brexit."