Britain can survive EU Brexit ‘no deal’ admits Bank of England
THE BANK of England has admitted that Britain is strong enough to survive a “no deal” with the European Union despite its previous gloomy forecasts.
In its latest report the Bank said that stress tests have revealed that the country’s banking system could cope with a so called “disorderly” Brexit where the country goes on to World Trade Organisation rules if talks with the EU collapse.
However, in an attempt to provide a sour note, the Bank of England still warned that no deal would be risky.
It comes ahead of a crunch EU summit next month where the European Council has to decide whether talks will move on to trade.
If they block further progress then many people expect Mrs May to walk out of negotiations and go for “no deal”.
The Bank of England report was welcomed by leading Brexiteers who pointed out that it again showed that the Project Fear claims of Remainers are wrong.
Tory MEP David Campbell Bannerman, a member of the European Parliament’s trade committee and Brexit steering group, said: “The wheels seem to be falling off Project Fear.
“Not only have we not lost 500,000 jobs but have the lowest unemployment since 1975, now we find UK banks will be sound financially even with WTO rules.”
Tory MP Jacob Rees Mogg said: “There is nothing to fear from leaving the EU without a deal, even the perpetually gloomy Bank of England is now admitting it.”
Bank of England Governor Mark Carney has come under fire since the referendum for a series of gloomy forecasts carrying on the Project Fear campaign he played a part in during the referendum.
The attempt to scare voters and undermine confidence in the British economy was first dreamt up by former Chancellor George Osborne who has continued it through editing a newspaper in London.
So far the doom-laden predictions have failed to materialise with the British economy still growing, record employment and two pharmaceutical giants this week becoming the latest major firms to invest in Brexit Britain.
The Bank’s stress tests showed the UK’s banking system could cope with an extreme economic stress scenario, equivalent to the worst possible outcome of the UK’s departure from the EU.
All seven of the lenders tested were given a clean bill of health and will not have to bolster their financial strength for the first time since the annual health check on the sector was launched in 2014.
Barclays and the Royal Bank of Scotland (RBS) emerged as the weakest of the seven lenders tested and only passed thanks to action they have taken over the year to boost their balance sheets.
The Bank put seven of the biggest lenders through their paces – Lloyds Banking Group, Barclays, RBS, HSBC, Santander, Nationwide Building Society and Standard Chartered.
In its bi-annual Financial Stability Report, the Bank found the lenders were strong enough to “continue to support the real economy through a disorderly Brexit”.
Banks could absorb £350 billion of losses over the next few years and still continue lending, it added.
But the Bank warned that it would need to look at whether banks needed to boost their financial balance sheet strength in case a “disorderly” Brexit was to coincide with a wider severe global recession.
It said: “In such circumstances, capital buffers would be drawn down substantially more than in the stress test and, as a result, banks would be more likely to restrict lending to the real economy.”
The Bank’s report also coincided with a Centre of European Policy Research paper showed that Ireland would lose 2.5 per cent of its workforce with no deal while the biggest loser in numbers of jobs would be Germany.
The thinktank had Britain as the second biggest loser with jobs but did not factor in changes made to the British economy which could be carried out once the UK is free of Brussels rules.
November 28th, 2017: Express