Brexit: Carney cautions against no-deal could see house prices drop

Brexit: Carney cautions against no-deal could see house prices drop

Mark Carney

The Bank of England Governor has warned the Cabinet that a chaotic no-deal Brexit could reduce real estate prices and trigger another financial shock from the economy.

Mark Carney met high-level ministers on Thursday to discuss the risks of a disorderly exit from the EU.

His worst-case scenario was that house prices could fall by as much as 35% in three years, a BBC source said.

The comments are likely to cause trouble among the Brexiteers.

There were also widespread reports that the governor told the Downing Street meeting that mortgage rates could shift, the pound and inflation could fall, and countless homeowners could be left in negative equity.

According to the Financial Times, one newspaper source said that all predictions made by Mr. Carney were "grim" and "deterrent". The FT said the governor had received questions from ministers, but there was no hostility.

However, The Sun had a different view of the meeting and reported that Home Secretary Sajid Javid and Health Minister Matt Hancock "retired" Mr. Carney for his doomed briefing.

Mr Carney, who has just agreed to remain Governor of the Central Bank until 2020, has been heavily criticized in the past when the Brexites accused him of being part of the Remain Camp.

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Thursday's briefing is not the first time that Mr Carney has warned that disorderly Brexit could trigger an economic shock, and he reflects some of the Bank's earlier predictions.

November's UK financial system's latest annual stress test warned of a 33% decline in property prices in the worst-case scenario.

In August, Carney told the BBC that the risk of a Brexit no-deal was "unpleasantly high".

This comment led leading Tory eurosceptic Jacob Rees-Mogg to call Mr. Carney "the high priest of Project Fear" while former Minister Iain Duncan Smith said, "There is no deal" and the bank "struggled to understand how that would work ".

Following the Downing Street meeting, the Prime Minister's official spokesman said ministers were confident that a Brexit agreement would be reached, but agreed to "ramp up" their no-deal plan.

"As a responsible government, we must plan for every eventuality, and the Cabinet agreed that no-deal will remain an unlikely but possible scenario in six months," the spokesman said.

The Bank of England declined to comment.

Roaming charges

The Cabinet meeting was part of a series of no-deal planning sessions that discussed the "unlikely" scenario that the UK is leaving the EU without an agreement. After each meeting, planning papers on various topics are published.

On Thursday, the papers revealed that British motorists may need an international driver's license if they want to drive in some European countries for a no-deal Brexit.

The government said that after March 2019, "your driver's license may no longer be valid" in the EU, in its latest no-deal planning papers.

The newspapers also warned that Britons traveling to the EU may need to ensure that their passports are still available for six months.

And in an interview with the political editor of the BBC, Laura Kuenssberg, Brexit's Secretary Dominic Raab said the government is trying to "give consumers reassurance" on roaming charges for mobile phones, but acknowledged that European carriers charge could forward.

He said, "No, I can not give a cast iron warranty, and what I can say is that the government will pass laws to limit the possibility of roaming charges being imposed on customers."

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