Bank of England scales back estimates for disorderly Brexit

The Bank of England has dialled back on its estimates for the worst case scenario for Brexit on the back of the preparations made by businesses since the end of 2018.

The BoE estimated that gross domestic product would contract by 5.5% peak to trough, having warned that a disorderly Brexit could wipe as much as 7.5% off Britain’s economy back in November last year.

Under a worst case scenario, Bank economists also forecast that unemployment would double to 7.0%, while inflation would more than double to 5.5%.

In remarks made to the Treasury Select Committee, Mark Carney, Governor of the central bank, said 75.0% of companies thought that they were as prepared for Brexit as they could be, with larger businesses more likely to be ready for the transition.

However, Carney added that a further extension period could be helpful.

"There is more preparation that can be done, both in terms of public preparation and preparation by businesses. It stands to reason that if there was more time, more would be accomplished," he said.

Meanwhile, when asked if the BoE might intervene in financial markets to support sterling if it went into free-fall, Carney said there was almost no chance of the monetary authority reversing its hands-off stance by intervening in foreign exchange markets.

"I can’t see a circumstance that we would intervene, either for market functioning purposes - never say never on that - but I would at least on a personal basis say never for monetary policy reasons," said the governor.