BOE: Bank Rate Could Rise to 5.5% Under Worst-Case...>

BOE: Bank Rate Could Rise to 5.5% Under Worst-Case Disorderly Brexit

- Disorderly Brexit: Initial 8% GDP hit, 7.75% Hit After 5 Years  

- Softer, Disruptive Brexit: Initial 3% GDP hit, 4.75% Hit After 5 Years

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The FPC judged that the UK banking system, remains strong enough to cope 

with a worst-case "disorderly" Brexit (no-deal, no-transition period) 

and simultaneous recessions more severe than the global financial 

crisis. The subsequent shocks from a disorderly Brexit would see CPI 

peak at 6.5%, with Bank Rate rising to 5.5%. A disruptive scenario, in 

which there is an absence of border and financial market disruption, 

would see CPI peak at 4.25%, requiring increases in Bank Rate to 1.75%. 

In the scenario where the UK retains an economic partnership with the 

EU, GDP growth could be anywhere between +1.75% better or 0.75% worse 

after 5 years relative to the 2018 November Inflation Report projections 

- which were based on an average of Brexit outcomes.