Why Mark Carney must tell us exactly what he told ministers
It’s slightly nuts that the main takeaway for the nation’s consumption from yesterday’s Cabinet was that house prices could fall a third over two to three years if there’s a no-deal Brexit - or at least according to the Bank of England.
As if this was terrible news!
The point as you’ll know is that a majority of people on low incomes or unemployed, who can’t afford to buy a property at today’s inflated prices, voted to leave the EU.
So many of them might well feel “no-deal house-price-crash — bring it on”.
Except except.
The Bank’s governor also warned that economic growth would slump from its already insipid rate, unemployment would rise, prices would rise, interest rates would rise and living standards would fall.
Banks wouldn’t go bust, but they would incur serious losses that would dent their appetite and ability to lend freely.
So the poor would get poorer (as would pretty much everyone - except hedge funds shorting the UK).
The bank’s main argument is that a no-deal Brexit would savage the UK’s productive capacity, so reliant are so many of our business on seamless, frictionless, costless trade with the EU.
And in those circumstances the non-inflationary growth rate of the economy would fall from its already lamentably low level.
So the Bank could not cut interest rates or create new money to bail us out, without risking an inflationary surge and breaching its mandate.
Yuck.
Of course the Bank may be wrong about the numbers. It has often been, and will be again.
But even the government has conceded that a no-deal Brexit could see lorries and their vital loads queueing from the M25 to the Channel Tunnel - which is the best picture you’ll ever have of a mega supply shock.
What follows?
Well the widespread leaks of what Carney told Cabinet has created a false market both in investment and politics.
The detail of what Carney said must surely be published so that it is possible to judge whether May’s “no deal is better than a bad deal” retains any credibility - either as a gambit for negotiating with the EU or as comfort to the rest of us that we don’t need to start stocking up on tinned food, candles and firewood.
PS The much better news for May, which also needs a light shone on it, was that if she were to pull off her Chequers deal (don’t scoff), the Bank would upgrade its current forecasts. Or so Carney assured ministers.