The Bank of England on Wednesday published its latest analysis of the effects Brexit could have on the British economy. The report has suggested the UK would suffer from severe economic disruption under all Brexit scenarios – potentially undergoing the worst economic crisis since World War 2. But Brexit architect Nigel Farage quickly dismissed the forecasts, pointing out a key flaw in the predictions Bank of England Governor Mark Carney presented.
Commenting on the analysis during his evening LBC show, Mr Farage said: “It all sounds like a complete, total catastrophe but these are not Bank of England’s forecasts.
“What they are is a set of assumptions put into a model to stress test whether UK banks could survive a massive economic recession. Don’t take those Bank of England figures too literally.”
The 88-page analysis of a worst case scenario has revealed that in the event of a no-deal Brexit, Britain’s economy could plummet by eight percent in the first quarter of 2019 from its current level.
The pound would reportedly slump by a quarter to less than parity against both the US dollar and the euro. According to the study, inflation would jump by 6.5 percent while the unemployment rate could surge by 7.5 percent.
Mr Farage however was quick to rebuke the “catastrophic” predictions: “All these Treasury forecasts, all the Bank forecasts – they all assume there’ll be no new trade deal with any other part of the world.
“They all assume the UK will lose access to existing trade agreements with other parts of the world. They all assume severe disruption at our borders. And they all assume migration numbers falling very, very low numbers.
“At no point, in any of these forecasts, do they assume that anything will change for the better. They assume that with the rest of the world we’ll be on WTO, we won’t be able to bring prices down.”
He added: “As such, I really think you have to take these with a pinch of salt. Folks, we’ve heard it all before.
“These people can’t forecast what’s going to happen next Thursday, let alone what the UK economy is going to be in 2030.”
In the event of a disruptive Brexit, where there would be no change to border trade or financial markets, the Bank of England warned GDP could fall by three percent from its level in the first three months of next year.
This scenario would see the unemployment rate increase to 5.75 percent and inflation to 4.25 percent.
Speaking at a press conference revealing the Bank of England’s forecasts, he said: “They hold more than £1 trillion of high-quality liquid assets and can access an additional £300 billion of liquidity through the Bank of England’s regular facilities.
“Major UK banks now can withstand many months without access to wholesale or foreign exchange markets.”
Just minutes after the forecasts were revealed, the pound had lost its earlier gains, trading broadly flat at $1.2744 against the US dollar after hitting a session high of $1.2806.
Published at Thu, 29 Nov 2018 06:58:00 +0000