Extreme Brexit could be worse than the financial crisis for the UK – BoE

"PREPARED FOR THE WORST"

"Our job is not hoping for the best, but to prepare for the worst," said at a press conference the Governor of the Bank of England, Mark Carney, pointing out that UK banks could face the worst shock caused by Brexit.

An agreement that would maintain the close relationship between Britain and the EU could lead to faster economic growth than that announced by the BoE earlier this month, the central bank said.

But all BoE scenarios badumed that interest rates would rise. In the worst case, rates could rise to 5.5% – a level comparable to that of 2007, before the financial crisis – from the current base rate of 0.75%.

A few hours earlier, the government had acknowledged that any Brexit option would be worse for the economy than staying in the EU, but said that leaving the block without any agreement with Brussels would weigh heavily on growth at least in the years 2030.

On the other hand, May's May-approved plan with EU leaders "will result in a result very close to the economic benefits of staying there," said Finance Minister Philip Hammond.

Government and BoE reports provoked angry reactions from uncompromising Eurosceptics, who saw the statements as a repetition of blatant official warnings to influence voters ahead of the 2016 referendum.

"I'm afraid we're ready for Project Fear 2.0," said David Davis, former Brexit Minister, who resigned in July to protest against May's plans.

Andrew Sentance, a former BoE interest rate maker, challenged the worst case scenario for the BoE.

"Does anyone really believe this is a realistic scenario?", He said. "The Bank of England undermines its credibility and independence by attaching such importance to these extreme scenarios and forecasts."

"ECONOMY SMALLER AND LOWER"

Carney denied the accusation of alarmism.

"Parliament has asked for this badysis," he said. "It's not supposed to scare people, it's supposed to rebadure that even if it happens, which is unlikely, the system is more than ready."

Opponents of Brexit said the projections belied the promises made by Brexit activists before and after the referendum.

"These figures show that the government's policy is to make our economy smaller and weaker," said David Lammy, a Labor opposition legislator who wants Britain to stay within the country. 39; EU.

According to a government report, in a scenario based on the Brexit plan announced in May in July, rather than on Sunday's modified deal with EU leaders, domestic production would be lower by 2.1 % in a little more than 15 years that Britain would stay in the bloc.

If there was no agreement, it would be 7.7% smaller.

Assuming zero net migration from the EU in the future, the impact on the economy would be heavier: 3.9% under the May agreement and 9.3% without agreement.

The report indicates that the British automotive and chemical sectors are facing the largest potential losses of a Brexit without agreement, accounting for more than 20% of production.

Brexit supporters say the May deal will hit Britain hard by making it harder to reach trade deals with faster-growing countries and regions outside Europe. It is not certain that legislators are influenced by the latest forecasts.