It seems like it was only yesterday that Bank of England governor Mark Carney was predicting fire and brimstone metaphorically, and a recession literally, if Britain votes for Brexit. Well, Brexit happened, the recession didn’t, and the Bank of England went so far as to hike rates in an attempt to cool off the economy which did everything but enter a recession.
Fast forward to today, when Carney was at it again, and in another masterclass of central banker propaganda, delivered a “chilling” warning to embattled PM Theresa May, warning that a hard, or “no-deal” Brexit could lead to economic chaos as bad as the 2008 financial crash and would unleash a property crash that could see house prices fall by 35%. The property crash would be driven by rising unemployment, depressed economic growth, higher inflation, and higher interest rates, the head of the central bank said.
Mark Carney sent a “chilling” no-deal warning to the UK government
During a briefing of senior ministers on BOE’s modelling on the consequences of the EU agreeing to a skeleton deal, one in which a few ad hoc arrangements are struck and a worst case chaotic exit, Carney said that he would not be able to avert a crisis by cutting interest rates – when the bank also predicted a dire recession – and that inflation and unemployment would rise.
Carney said that unlike the BoE’s rate cut in 2016, this time the shock to Britain’s economy would come from disruption on the supply side, as trading relations between the UK and EU took a hit.
“He explained that in those circumstances, there would be a contraction of supply,” said one witness to the cabinet talks. “If you cut rates you would end up with higher inflation”.
Last week, the governor made similar warnings in public, telling MPs on the Treasury committee that in a disorderly no-deal Brexit, “the real income squeeze will return for households across the country for a few years”.
