No-deal Brexit could be as catastrophic as 2008 financial crash and wipe third off house prices, Carney warns

Bank of England Governor, Mark Carney, has issued a stark warning over a no-deal Brexit
REUTERS
Sean Morrison @seanmorrison_14 September 2018
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The impact of a no-deal Brexit could be as catastrophic as the financial crisis with house prices plummeting by a third, Mark Carney has warned ministers.

The Bank of England governor briefed Theresa May and senior ministers on his planning for a “cliff edge” split with the EU at a special Cabinet meeting.

He warned that house prices could tumble by as much as 35 per cent over three years in the worst case scenario, it was reported following the talks on Thursday.

Mr Carney’s bleak prognosis came as France said it could halt flights and Eurostar trains from the UK if there was no agreement in March 2019.

The Bank of England declined to comment on Mr Carney's briefing to ministers, but his advice reflects the findings of the Bank's latest annual "stress test" of the UK financial system in November.

This warned of a 33 per cent fall in house prices in a worst case scenario.

France's Europe minister Nathalie Loiseau, who is in London for talks with Brexit Secretary Dominic Raab, warned Paris could halt major transport links with the UK in the absence of a Brexit deal.

Prime Minister Theresa May arrives at Downing Street in London, Britain
EPA

Speaking at the Chatham House international affairs think tank, she said EU member states were working on measures to ensure there was not "chaos" after Britain leaves on March 29.

Asked whether, in the event of a no-deal Brexit, it was a "real possibility" Eurostar trains from London could be rejected and planes leaving Britain turned back, she said: "The consequences of a no-deal which you mentioned are correct.

Governor of the Bank of England Dr Mark Carney leaves Downing Street following a Cabinet meeting
PA

"If we do nothing and if we reach no agreement, this is what would happen, among other examples."

She added: "This is the reason why we need to prepare for a no-deal because we cannot wake up on March 30 and say to our fellow citizens and to our businesses 'we thought it would not happen so we are not ready'."

Downing Street sought to play down her remarks, saying preparations were in hand to deal with "all possible scenarios" after Britain leaves the EU on March 29 2019.

"It is in everybody's interests for that not to happen," the Prime Minister's official spokesman said.

Following the three-and-a-half hour meeting of the Cabinet, the spokesman said ministers remained confident of securing an agreement, but had agreed to "ramp up" their no-deal planning.

"As a responsible Government, we need to plan for every eventuality. The Cabinet agreed that no-deal remains an unlikely but possible scenario in six months' time," the spokesman said.

Mr Raab said they were putting in place measures to manage the risks in the event of no-deal, but acknowledged there would be some "disruption" if there was no agreement.

"We need to be honest about this. In the event of a no-deal scenario, which is not what we want, we would face short-term risks and short-term disruption," he told BBC News.

The warning came as the Government released its latest tranche of 28 technical papers on the no-deal preparations.

They include advice to motorists that they may need to obtain an International Driving Permit to continue driving on the other side of the Channel if the EU refuses to recognise UK licences.

British drivers who fail to obtain the correct documents may be turned away at borders or face enforcement action, the papers warn.

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