No-deal Brexit may trigger property market crash

london — Britain’s property market would crash and mortgage rates spiral up in the event of a chaotic no-deal Brexit, with house prices falling 35 per cent over three years, Bank of England Governor Mark Carney told ministers, The Times newspaper reported.

The United Kingdom is due to leave the European Union on March 29 and yet little is clear. There is, so far, no full exit agreement between Brussels and London and some rebels in Prime Minister Theresa May’s Conservative Party have threatened to vote down a deal if she clinches one.

Details of Carney’s briefing to the cabinet on Thursday were reported by British newspapers including the Financial Times, The Times and The

Guardian. The Bank of England declined to comment and it was unclear what assumptions Carney’s models were based on.

According to The Guardian, Carney warned the ministers, including May, that the impact of a chaotic nodeal Brexit could be as catastrophic as the 2008 financial crisis.

“Our job is to prepare for the worst, not hope for the best,” Carney, a former Goldman Sachs banker who has run the Bank of England since 2013, wrote in an opinion piece for the Dai-

Our job is to prepare for the worst, not hope for the best

Mark Carney, Governor, Bank of England

ly Mail. “By identifying the risks and coming forward with solutions, the Bank is working hard every day to get our financial system in shape for Brexit, whatever form it takes.”

The piece did not mention a house price crash or the 35 per cent figure reported by the Times.

Carney is due to speak in Dublin at 1000GMT. Brexit Secretary Dominic Raab was due to speak by phone to EU chief negotiator Michel Barnier on Friday. Many business chiefs and investors fear politics could get in the way of Brexit, thrusting the world’s fifth largest economy into a “no-deal” divorce they say would weaken the West, spook financial markets and clog up the arteries of trade.

In recent months, May’s government has stepped up planning for a no-deal Brexit and has underscored the disruption that such a move would cause to businesses and the public.

Without a deal, the UK would move from seamless trade with the rest of the EU to customs arrangements set by the World Trade Organisation for external states with no preferential deals.

In one note of optimism, Carney said that if May struck a Brexit deal on the basis of her “Chequers” proposals then the economy would outperform current forecasts because it would be better than the bank’s assumed outcome, the FT said. —