BANK BOSS CARNEY’S ‘PROJECT HYSTERIA’

● Worst slump since WW2 feared over no-deal Brexit

● Critics lambast Governor for ‘meddling in politics’

BANK of England Governor Mark Carney faced a furious backlash last night over his dire warnings Britain would be plunged into the worst economic crisis since the Second World War in the event of a no-deal Brexit.

MPs tore into the Governor’s latest bleak prognosis, accusing him of meddling in politics by attempting to stoke up Project Fear once again and creating panic ahead of a crucial Commons

vote on the withdrawal deal. Under Mr Carney’s doomsday scenario the pound would crash, inflation would soar and house prices would fall by 30 per cent.

The UK’s GDP would nosedive for at least five years, crippling finances and triggering a worse recession than the 2008 crisis.

In a chilling intervention, Mr Carney warned the Bank’s job was not to “hope for the best but prepare for the worst”.

But his assessment enraged Brexiteers and business analysts who said the 53-year-old Canadian was doing more harm by scaremongering about an economic disaster.

Conservative MP and Brexiteer Jacob Rees-Mogg accused Mr Carney of talking down the pound, saying the Bank of England’s warnings “lack all credibility”.

He said “Project Fear” had become “project hysteria”, adding: “Before the referendum we were threatened with the plague of frogs.

“Now they warn of the death of the first born. The Bank of England has gone from being discredited to being hysterical.”

Tory MP Priti Patel blasted: “The Bank of England is undermining its credibility and independence by giving such prominence to these extreme economic forecasts and scenarios.”

Mr Rees-Mogg accused the Governor of deliberately “creating panic”, while fellow Tory MP Charlie Elphicke said: “The other day he told the Treasury Select Committee that interest rates could go down in a no deal Brexit. Today he says they will rise. The Bank of England is all over the place.”

European Research Group deputy chairman Steve Baker MP said: “The Governor is often one of our greatest statesmen but not, ironically, when he weighs into politics.”

Independent business analyst Andrew Sentance, formerly of the Bank of England, accused Mr Carney of meddling in politics.

He said: “The Bank of England analysis is highly speculative and extreme. It will add to the view that the Bank is getting unnecessarily involved in politics and that will further undermine perceptions of its independence and credibility.”

The backlash came after the Bank published figures of what would happen in a “worst-case scenario” following Brexit.

It suggests in a last-minute no deal, no transition Brexit, Britain’s GDP could plunge rapidly by eight per cent, much worse than in 2008.

Theresa May was last night forced to defend Mr Carney, insisting: “The Bank of England is an independent body. This is an independent analysis that they have put out. What our analysis shows is that the best deal available that honours the referendum is the Government’s proposal.”

It’s not the first time Mr Carney, who was appointed by George Osborne in 2013, has come under fire. Tory MPs lambasted him over his dire economic warnings during the EU referendum campaign, leading to accusations that he was playing politics.

But he insisted: “These are scenarios not forecasts – they illustrate what could happen, not necessarily what is most likely to happen.

“The impact of Brexit will depend on the direction, magnitude and speed of the effect of reduced openness on the economy. The direction of the effects of the reduction in openness is clear – lower supply capacity, weaker demand, lower exchange rate, higher inflation.

“The level of preparedness of businesses and infrastructure, infrastructure such as ports, customs systems and transportation operations, will be important determinants of how well the economy adjusts to new trade barriers.” Meanwhile, a Government analysis

said Mrs May’s favoured plan will leave the economy 2.5 per cent smaller after 15 years than if the country had stayed in the EU.

But crashing out without any deal would be much worse, potentially meaning giving up 9.3 per cent of GDP. London does best out of a no-deal scenario, losing out on around six per cent of future growth. The North-east suffers most in a no deal, losing out on more than 10 per cent. The absolute worst-case scenario is a 10.7 per cent hit to the economy after no deal – which is equivalent to £200billion or £3,000 per person by 2035, according to Bloomberg analysis.

The Canada-style relationship endorsed by many Brexiteers would result in a 6.7 per cent hit.

And even a Norway model, keeping similar free movement rules, would entail a 1.4 per cent loss.