As UK Prime Minister Theresa May is trying to convince her party-mates and opposition MPs to get on board with the Brexit deal she has negotiated with the European Union, she has received support from the country’s central bank. In a warning bell report, Bank of England has outlined the dire scenario in the event the UK leaves the EU without a deal, saying it would create a tsunami of economic woes for the country.
In a sentence, the bank predicts that the UK’s economy could shrink by 8%, inflation rise by 6.5%, unemployment reach up to 8%, the British pound lose almost a third of its value and the real-estate market would crash leading to a 30% drop in value.
This scenario predicts the British economy would drop 2% more than what it suffered during the 2008 global financial crisis. In the five years following the 2008 credit crunch, UK's GDP had contracted by more than 6%.
This report is an exact opposite of the statement made by the UK’s treasury department which said that the country would suffer in any form of a Brexit deal and hence should not fear crashing out.
The silver lining in this report is the Bank does not guarantee the above numbers will come to pass but rather it is a worst-case scenario in the event of a “disorderly Brexit.”
"These are scenarios not forecasts. They illustrate what could happen not necessarily what is most likely to happen…Taken together the scenarios highlight that the impact of Brexit will depend on the direction, magnitude and speed of the effect of reduced openness of the UK economy," Bank of England governor Mark Carney said.
In contrast, the report says if the country goes through with Brexit which would then create a disruptive effect on the British economy, the GDP is expected to fall by 3% over five years, house prices slide down 14%, and unemployment reaches 5.75%.
These numbers are bound to give Britain’s embattled PM Theresa May more numbers to back her negotiated deal as well as counter the claims being made by the likes of former Foreign Secretary Boris Johnson. Johnson is one of the leading voices who has repeatedly criticised May’s approach to Brexit saying the deal does not go far enough in removing UK from EU’s sphere of influence.
The British parliament will vote on May’s negotiated Brexit deal on December 11.
(The above story first appeared on LatestLY on Nov 29, 2018 04:38 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).