According to multiple reports, Bank of England head Mark Carney warned senior British politicians that if the UK leaves the European Union without a deal in place – a so-called no-deal Brexit – property prices around the country could plummet up to 35 percent, and send another financial jolt throughout the economy.
WikiTribune now wants to look into this claim as it might not be as simple as it first appeared.
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According to a source as reported by the BBC, on August 13 Carney told ministers behind closed doors that a no-deal Brexit worst-case scenario could depress house prices by as much as 35 percent over three years.
Meanwhile, The Times (may be behind paywall) reported that Carney said a no-deal Brexit would result in a 35 percent fall. This could result in millions of homeowners falling into negative equity – when property is worth less than the mortgage used to secure it, according to the Money Advice Service, an independent service originally established by the government.
The Bank of England regularly conducts ‘stress tests’ to understand whether the country’s banking system can withstand serious financial upsets. It declined BBC and The Times‘s request for comment.
But Ed Conway, the economics editor at Sky News and columnist for The Times, warned that people might be “getting the wrong end of the stick here” because stress tests are not designed as forecasts.
Instead, Conway said they “are BEYOND WORSE CASE SCENARIOS which, like caps lock sentences, are supposed to shock the city into safe balance sheet behaviour.”
Short thread: major note of caution needed with this Bank of England house price crash forecast story. Now (clearly) I wasn’t in cabinet & wasn’t privy to what was discussed. But I have a strong suspicion people are getting the wrong end of the stick here. Let me explain: 1/