Morning Briefing: Tough decision for Bank of England - "no deal" papers -
Mark Carney has warned that a no-deal Brexit could lead to an economic crash on the scale of the 2008 financial crisis. This deserves to be taken seriously, and it is noteworthy that The Times reports even the Cabinet’s ardent Brexiters didn’t challenge his assessment. That does not mean, however, that we should heave a massive sigh of relief if Theresa May instead negotiates a miserable deal. There is a better option: a People’s Vote at the end of the talks, whether we have a deal or not.
The Bank of England governor’s most eye-catching warning was that three years after a no-deal Brexit, house prices would be 35% lower than they would otherwise have been. No deal would mean a massive disruption in trade, a contraction in economic activity, higher unemployment, rising inflation - and most likely rising interest rates too.
Unlike the financial crisis, this self-inflicted collapse in growth would be driven by a shock to supply rather than demand. This puts the Bank of England in an awkward position: if it raises interest rates, they further repress economic activity; but if it fails to do so, inflation could soar - further disrupting economic activity.
Of course, our economy is already suffering from the impact of Brexit uncertainty, with a big hit to our currency, inward investment and economic growth. And the government’s own leaked impact assessments show that any form of Brexit will lead to an economic downturn and a hit to the public finances - meaning less money for the NHS and public services.
By far the best course of action is not to put the country having to choose between the devil and the deep blue sea. If Britain faces a no-deal Brexit, then the people should be able to reject it. And if May negotiates a deal, they should also be asked to decide if they prefer that to our current EU membership.
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Quote of the day
“All of the predictions were grim and the numbers were chilling. Carney was listened to respectfully. He took a few questions afterwards, but none of them were hostile.”
The Financial Times quotes a source describing Cabinet’s meeting with Mark Carney
Video of the day
WATCH: Dominic Raab says that it's "easy" for businesses to blame Brexit at the moment - Brexiters like Boris Johnson, Dominic Raab and Liam Fox are refusing to take responsibility for where they have led the country. We need a People's Vote.
“No deal” papers
In addition to the Bank of England’s warning about house prices and recession, France said it might stop trains and planes from the UK if we crash out of the EU with no deal. Our own government yesterday published 28 papers highlighting some of the consequences. Here are a few:
- UK driving licences would no longer be valid in the EU.
- Anyone with less than six months on their passports could be denied entry to EU countries.
- If you can still get to the EU, you may once again face roaming charges if you use your mobile phone.
- Car manufacturers will have to fill out extra paperwork to show their vehicles comply with EU safety standards.
- We’d have less warning of space debris crashing to Earth.
As people read these warnings, though, don’t conclude we should all be grateful if Theresa May brings back a miserable deal. There is a better option: now we know more about the realities of Brexit, ask the people what they want.
Video of the day 2
WATCH: InFacts takes a quick look at the "highlights" from today's no deal Brexit papers.
Barnier’s orders stand
UK politicians have spent the last week attempting to persuade EU leaders that with the risk of a no-deal Brexit creeping steadily upwards, Michel Barnier needs a new and more flexible mandate. The EU appears to be playing good cop, bad cop at the moment. While EU officials and the 27 other EU members have doubled down on Barnier’s current mandate, we’re also promised warm words about the best bits of May’s Chequers proposal at a conference in Salzburg this month, the Guardian reports.
Of course, coordinating 27 countries on a new negotiating mandate should be significantly harder than coordinating one cabinet. Perhaps Theresa May should show some of the flexibility she’s asking for?
Tweet of the day
PM’s praetorian guard?
Almost 60 Tory MPs have formed a new group to stop hard Brexiters wrecking Theresa May’s negotiations, according to The Times. The Brexit Delivery Group brings former Remainers such as Amber Rudd and Tom Tugendhat together with Leavers such as Andrew Percy. “They represent almost a third of the Tory parliamentary party and have vowed to stand up to ‘purists’ on either wing who stand in the way of attempts to get a negotiated Brexit settlement and avoid a no-deal outcome.”
More Brexit news…
Chris Giles: A weaker British pound makes no economic sense (FT £)
Susie Courtault: Whatever Leavers claim, Brexit puts women’s rights at risk (InFacts)
Tomorrow, Friday 14th September
|-||Parliament in recess for conference season|
|-||Pro-EU campaigner Gina Miller to give speech in Dover|
Tomorrow, Saturday 15th September
|12:00||People's Vote NHS rally|
|-||Liberal Democrat Autumn Conference begins|