The U.K.’s preparations for a no-deal Brexit may help to limit the damage to the economy, though the fallout will still be considerable, according to the Bank of England.
Updating its assumptions, Governor Mark Carney said progress in preparations means the assessment of the “worst-case no-deal no-transition scenarios has become less severe.” The drop in GDP from peak to trough is less than the 8% seen last November, but still a dramatic 5.5%.
Unemployment will rise to 7% and inflation will hit 5.5%, lower than 7.5% and 6.5% seen in the initial document late last year. The BOE reiterated that the figures were scenarios, not forecasts.
“These improvements in preparedness mean that the appropriate set of assumptions to underpin a worst-case scenario would now be less severe than in those used in the disorderly scenario published in November,” Carney said in a letter to Parliament’s Treasury Committee.
These actions include measures to ensure smooth continuation of financial services, and efforts to prepare border facilities.
Carney said there’s more work that can be done by businesses. “It stands to reason that if there were more time, more could be accomplished,” Carney told the Committee.