Bank of England (BoE) governor Mark Carney has warned the cabinet that a chaotic no-deal Brexit could cause house prices to plummet and result in an economical shock similar to that caused by the financial crisis.
On Thursday, Carney met with senior ministers to discuss the risks of a disorderly exit from the European Union (EU), with his biggest concern being that property prices could fall by 35% over a three year period, a source told the BBC.
The BoE routinely carries out stress tests, and the most recent test in November revealed that, in a worst-case scenario, the UK economy could see house prices fall by 33%. Furthermore, there are several reports stating that the governor advised ministers at the Downing Street meeting that mortgage rates could spiral, the pound and inflation could dip, and homeowners could be left in negative equity.
Speaking on Friday in Dublin, Mr Carney said the stress test was aimed at making sure the largest UK banks could continue to meet the needs of the country "even through a disorderly Brexit, however unlikely that may be".
"Our job, after all, is not to hope for the best but to plan for the worst," he added.
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