The Bank of England is well prepared for “whatever path the UK economy takes, including a wide range of potential Brexit outcomes”, according to the Governor of the Bank of England, Marc Carney.
Bank of England Governor says UK banks prepared for Brexit pic.twitter.com/NWF3aloVlH
— RTÉ Business (@RTEbusiness) September 14, 2018
On Thursday, Carney warned that, in a worst-case scenario, house prices could crash 33 per cent over a three year period following a no-deal Brexit.
He further stated that the economy could face a financial crash similar to banking collapse of 2008, where house prices in the UK fell, on average, by 16% in one year.
Carney was speaking to senior ministers on Thursday to discuss the risks of a disorderly exit from the EU. In a worst case scenario he said mortgage rates would spiral, the pound would plummet and inflation and interest rates would rise, leaving millions of homeowners in negative equity.
The Bank of England regularly carries out “stress tests” to examine the potential impact of a hypothetical adverse scenario.
The latest test said a 33% fall in house prices could occur in a worst-case scenario.
Speaking on Friday in Dublin, Carney said the stress test was aimed at making sure the the largest UK banks could continue to meet the needs of the country through “even through a disorderly Brexit, however unlikely that may be”.
“Our job, after all, is not to hope for the best but to plan for the worst” said Carney