Thursday 29th November: embargo immediate
Treasury and Bank of England forecasts are eccentric and demeaning to their reputations
Yesterday both HM Treasury and the Bank of England issued their assessment of the impact of various BREXIT scenarios and in particular ‘no deal BREXIT.’ Commenting, Global Britain Director Ewen Stewart said,
“We are at a complete loss to understand both the logic and reasoning of the speculations about the UK’s economy after Brexit which, in our view, are eccentric. In particular, the Bank of England’s worst case outcome for a no deal BREXIT is inexplicable. Its suggestion that no deal would cause an 8% fall in GDP, a 25% fall in Sterling and a 30% fall in house prices is in our view so absurd as to demean its reputation.
“Further, to suggest the Bank would raise rates to 5.5%, under that scenario, is the opposite of what it did during the financial crisis when it lowered rates as growth fell. Why the different response today? It is possible business has not heard Mark Carney’s warning, but first thing today Sterling was stable against the USD at $1.28, slightly higher than just after the EU referendum and the FTSE 100 was up strongly.
“We would like to remind people that the Treasury predicted an immediate drop of 5% of GDP and 800,000 job losses in the event of a vote to leave the EU. The actual outcome has been GDP growth of over 3% and over 600,000 new additional jobs since the referendum. That 8% swing is equivalent to over £160bn.
“As a point of reference Global Britain argued before the referendum that a vote to leave would have a minimal impact on the economy with a modest positive longer term impact assuming reasonably open and stable fiscal and regulatory policies were followed. In the event the British economy has performed even better than we predicted.
“We are sorry to say forecasts of the nature given yesterday by HM Treasury and the Bank of England undermine confidence in Government agencies, breach trust and risk damaging confidence.”
NOTES TO EDITORS:
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