Britain crashing out of the European Union without a deal could trigger a deep and damaging recession with worse consequences for the UK economy than the 2008 financial crisis, the Bank of England has warned. Raising the stakes as Theresa May battles to win support in parliament for her Brexit deal, the central bank said that failure to reach a deal with Brussels – with no transition period to a new trading relationship – could spark an immediate economic crash. GDP could fall by as much as 8% next year, exceeding the depth of the recession that followed the financial crisis in one of the worst-ever peacetime capitulations for the economy. However, the gloomy figures were criticised by respected economists Paul Krugman, a former winner of the Nobel prize in economics, and Andrew Sentance, a former member of the bank’s interest rate-setting committee, who said they were too severe. According to the Bank’s analysis, house prices could fall by 30% and the unemployment rate could increase from its current level of 4.1% to about 7.5%, while interest rates could be forced to rise as inflation increased to 6.5%. In sharp contrast, the Bank said May’s Brexit deal had the potential… Read full this story
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