Carney Defends BOE's Publication of Worst-Case Brexit Analysis

Galtero Lara
Diciembre 7, 2018

The Bank of England said last week that under a worst-case exit from the European Union, Britain could suffer greater damage to its economy than during the global financial crisis.

The governor of the Bank of England made comments about Lord King of Lothbury, who ran the Bank from 2003 to 2013, at a parliamentary hearing where he defended his Brexit projections.

Reminding critics that a large team of 20 economists had worked on the report over a period of several years, he said it wasn't the result of staying "up all night" to simply write a letter to the Treasury Committee.

"For individual food products obviously it's going to vary but what people will do is what everyone does, it's that if the price of something goes up more than the price of something else, they switch products".

House prices could fall around 30%.

Mervyn King, an ex-BoE governor, has likened Prime Minister Theresa May's draft Brexit deal to the appeasement of the Nazis in the 1930s, and described the ongoing shambles as "incompetence on a monumental scale".

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"There's no exam crisis. We didn't say up all night".

"Tail risk is tail risk", he said, adding that it was "low probabilty that all these risks would happen at the same time".

Labour MP John Mann gave Mr Carney his backing and hit back at Mr Rees-Mogg, pointing out that the Committee had "unanimously" asked the Bank to provide the analysis.

Continuing his defence of the Bank's doomsday scenario relating to interest rates - which are modelled to increase by 5.5% in an extreme hard Brexit - Mr Carney said: "The market has never experienced something like this".

"We would not be comfortable...outsourcing supervision of this incredibly complex, incredibly important financial sector", he said.

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