Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, wrote to Mark Carney, Governor of the Bank of England, in June, as well as HM Treasury and the Financial Conduct Authority, asking them to produce and publish an analysis of the impact of the Brexit Withdrawal Agreement and future framework, once it has been negotiated.
Mrs Morgan wrote to the Governor on 11 October to set out the Committee’s expectations of the Bank’s Brexit analysis. The Governor has today confirmed that “the Bank will provide an analysis of how the EU Withdrawal Agreement will affect our ability to deliver our statutory remits for monetary and financial stability, including in a ‘no deal no transition’ scenario.”
Mr Carney also provided public clarity on the briefing he gave to Cabinet on 13 September, which was reported as containing a forecast that house prices would fall by a third in a ‘no deal’ scenario.
Mr Carney confirmed that he set out the Bank’s 2018 stress test scenario, which includes a 33 per cent fall in house prices, and that “stress test scenarios are not predictions of what is most likely to happen but rather estimates of worst case scenarios however unlikely they may be.”
Commenting on the Brexit analysis, Mrs Morgan said:
“The Bank of England’s Brexit analysis will help ensure that Parliament is provided with a full and frank assessment of the Withdrawal Agreement before it comes to vote.”
Commenting on the Bank’s stress test scenarios, Mrs Morgan said:
“As the Committee heard from the Governor in December last year, and again in July, one of the parameters of the Bank’s stress tests is a 33 per cent fall in house prices.”
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