House prices would fall by a third if there is a no-deal Brexit, Mark Carney warns Cabinet

Posted On: 
14th September 2018

House prices in the UK would collapse by one-third if Britain crashes out of the EU without a deal, Mark Carney has warned.

Mark Carney Mark Carney leaves yesterday's Cabinet meeting.
Credit: 
PA Images

The Bank of England governor delivered the grim assessment at a special meeting of the Cabinet yesterday.

Mr Carney attended the start of the three-and-a-half-hour session in 10 Downing Street, which came amid growing fears that Theresa May will fail to reach an agreement with her Brussels counterparts.

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According to The Times, he told the Prime Minister's top team that soaring interest rates would cause house prices to fall by 35% in the worst case scenario.

The value of the pound would also plummet, while inflation would rocket, he said.

And he warned that the Bank of England's options for dealing with such a crisis were limited, as interest rates had already been slashed in the wake of the financial crash 10 years ago.

One source told the paper: "Carney was very spicy. You saw a few eyebrows going up around the room but nobody challenged him.”

But The Sun claims Home Secretary Sajid Javid and Health Secretary Matt Hancock both challenged the governor over his warning.

A source said: "Matt and Sajid took Carney on to demand to know what he planned to do about all his doom and gloom.

"It got quite tasty, but it was all perfectly fair questioning."

A Downing Street source told PoliticsHome: "The governor was outlining the worst-case scenario, not what we are planning for."

TATTERS

But Lib Dem MP Tom Brake, of the pro-EU Best for Britain campaign group, said: "It is clear that the mantra that no deal is better than a bad deal is just hogwash with this sledgehammer of an announcement. We are facing a Brexit no-deal house price collapse.

"The Conservatives used to be the party of the property owning democracy; now that epithet lies in tatters as they are the party of Hard Brexit and economic disaster.

"We are now six months away from Brexit and people up and down the country are fearful for what the future brings. No-deal Brexit or even the Prime Minister's potential deal will leave Britain poorer, weaker and more isolated.

"The people she is now hurting are her own voters - she will rue this day and her decisions on Brexit  threaten to tear the Tories asunder."