Carney criticised for Brexit property ‘gloom’

THE Governor of the Bank of England has been accused of spreading “gloom and despondency” for suggesting house prices may fall 35pc after a no-deal Brexit.

Mark Carney told the Cabinet yesterday that in a “worst case scenario” Brexit, mortgage rates would soar, the pound would plummet, inflation and interest rates would rise leaving millions of homeowners in negative equity.

Both Remainers and Leavers in the Cabinet questioned his methodology, saying he had ignored what the Government would do to avert the scenario.

It came on the day that the Government published its latest batch of 28 no-deal preparation papers, containing details of how passports, driving licences and phones would be affected.

Mr Carney, widely perceived as a Remainer, spent 10 minutes addressing a three-and-a-half-hour Cabinet meeting, convened to discuss no-deal planning, and outlined Bank of England modelling for various Brexit outcomes.

He said the Prime Minister’s Chequers proposal would lead to an upgrade in growth forecasts because it would be a better-than-expected result, but he set out a series of increasingly dire predictions for no deal.

He said house prices would fall by 35 per cent over three years in a “chaotic” no-deal Brexit and by 25 per cent if there was at least some cooperation be- tween Britain and the EU.

One Cabinet source said: “Ministers on both sides of the Brexit debate were asking him how he had got to those numbers and pointed out there was no input from policymakers.”

David Jones, the former Brexit minister, said: “The fact is that the economy has defied the predictions of many Remainers and is doing well, with record levels of employment.

“Mark Carney should stop going around spreading gloom and despondency and concentrate on the benefits of

Brexit.” Earlier Nathalie Loiseau, the minister for European affairs in France, was accused of “blatant scaremongering” after she said Eurostar trains would stop running and aircraft grounded in a no-deal Brexit.

Ms Loiseau, 54, insisted: “If we do nothing this is what will happen.” But Downing Street ridiculed her predictions, saying it was “in everyone’s interests” to keep the Channel Tunnel open and aircraft flying normally.

Included in a new batch of no-deal scenarios published by the Government yesterday, was the disclosure that blue passports would not be available straight after Brexit as the designs were not ready. Anyone who renews a passport in 2019 will have a burgundy one, although it will not have the words European Union on the cover. Tourists will have to ensure their passport is valid for at least six months when they visit the EU in the event of no deal.

British driving licences would not necessarily be accepted abroad, meaning drivers would have to pay £5.50 for an international permit to drive once across the Channel. EU drivers coming to Britain will face no such restrictions.

Predictions by Remainers that mobile phone roaming and data charges would be reintroduced were largely quashed as the Government said the largest mobile operators, covering 85 per cent of customers, had agreed not to reintroduce them.

But the UK would be shut out of Copernicus, the world’s largest Earth observation satellite programme, and will not receive its data. The UK will rely instead on existing data from the US.

Dominic Raab, the Brexit Secretary, yesterday ignited a row with John Lewis after he said businesses that “aren’t doing so well” should not take the “easy” option of blaming Brexit.

The partnership’s profits were all but wiped out in the first half of its financial year, with the retailer blaming uncertainty “in part due to ongoing Brexit negotiations”. Mr Raab said struggling businesses should “take responsibility for their own situation” instead of making the “mistake” of blaming Brexit and politicians. One of the aims of yesterday’s meeting was to assuage the Brexit concerns of businesses, so the timing and nature of the John Lewis announcement will have been viewed as unfortunate for Theresa May’s government.

Mr Raab told the BBC: “It is rather easy for any business that isn’t doing well to point to Brexit but let me give you the facts. This week we have had economic growth accelerating. We have had real wages accelerating.”