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- BOE warns U.K. may face economic turmoil in no-deal Brexit
BOE warns U.K. may face economic turmoil in no-deal Brexit
The Bank of England warned of significant market volatility and “material risks” of economic disruption in the event of a no-deal Brexit at the end of this month.
The BOE’s Financial Policy Committee, in its last scheduled meeting before the current deadline of Oct. 31, said the financial system is prepared for the fallout of Britain abruptly leaving the European Union. Still, asset prices could fall sharply and financial conditions could deteriorate.
“Financial stability is not the same as market stability,” the committee said. “Significant further asset price volatility is to be expected in a disorderly Brexit.”
The BOE said the EU should do more to contain remaining risks to financial markets, including to 17 trillion pounds of non-cleared swaps maturing after October, and that these risks could “amplify volatility or spill back to the U.K.”
While the BOE has said planning for a no-deal scenario has helped to limit the potential damage to the economy, the central bank’s worst-case scenario still sees a dramatic 5.5% drop in GDP.
BOE Governor Mark Carney says the goal is to prevent problems in the financial plumbing so that the sector doesn’t make things worse for the broader economy.
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