Bank of England governor Mark Carney needs to clarify whether house prices would be slashed by a third in a ‘no deal’ Brexit, the chair of the Treasury select committee has insisted.
Nicky Morgan, who chairs the Treasury Select Committee in Britain’s Parliament, made the request in a letter to Carney in which she reiterated that the BoE should produce an analysis of the impact of Brexit before any vote on parliament on a deal.
The BBC reported he told ministers that in a worst-case scenario house prices could fall by 33% over three years.
However, it was later claimed the governor was setting out what the Bank of England was prepared for – not what it was forecasting.
In a letter to Carney, Morgan asked for clarity on the issue, and said: “I note the confusion surrounding your briefing to Cabinet on 13 September, and in particular media reports that this contained a forecast that house prices would fall by a third in a ‘no deal’ scenario.
The BoE declined to comment on the reports at the time, and Carney did not address them directly in a public appearance on the day of their publication.
The reports revived criticism of Carney from some Brexit supporters who accused him of overstepping his remit when he warned in 2016 that Britain’s economy would be hit if voters decided to leave the European Union.
They were angered again by more recent comments from Carney saying the economy would be damaged if there is no deal to smooth Britain’s exit from the EU.
Morgan, who opposed Brexit before the referendum, said in her letter to Carney that she wanted to know if Carney had been referring to the extreme financial scenarios used last year by the BoE for its tests of banks’ financial health, or if he was giving a more specific warning.
The Royal Institution of Chartered Surveyors said earlier on Thursday that Carney’s reported remarks had weighed on some of its members’ views about the outlook for the housing market.
“If you have anything further to add, both about the content and scope of your briefing, and the subsequent reporting of it, I would be grateful if you could do so in your response to this letter,” Morgan asked Carney in her letter.
The Treasury Committee has also asked Britain’s finance ministry and its Financial Conduct Authority regulator to assess the impact of Brexit.