MNI INSIGHT: BOE To Publish Brexit Forecasts In Coming Days

--Bank Of England To Publish Brexit Forecasts Soon

--But BOE Governor Will Avoid Putting Numbers On Scenarios In Committee

Appearance

By David Robinson

     LONDON (MNI) - The Bank of England could deliver its full analyses of

different Brexit scenarios in the coming days, but Governor Mark Carney will

stop short of providing details when he appears with colleagues before

parliament's Treasury Committee Tuesday.

     Carney has promised to comply with Treasury committee chair Nicky Morgan's

request to provide its Brexit scenario analysis, but the Bank is reluctant to be

dragged into a political firestorm if numerical forecasts for the economic

impact of Brexit are seen to back either side of the contentious debate on the

issue.

     A Treasury committee official confirmed that they had not received the

analyses and were not now expecting them.

     Since the June 2016 Brexit vote, the MPC has adopted a convention of basing

its central growth and inflation forecasts on the assumption of a smooth

transition to an average of possible outcomes to the UK's negotiations on

departing the EU, excluding a cliff-edge no deal. This will no longer be

applicable once the shape of the final agreement is clear, and lawmakers on the

Treasury committee will inevitably grill Carney and his colleagues, Deputy

Governor Jon Cunliffe, Chief Economist Andy Haldane and MPC member Michael

Saunders, about the possible effects of leaving the trading bloc.

     --CARNEY TO SIDESTEP NUMBERS

     This will be their first appearance since the publication on Nov. 14 of

Prime Minister Theresa May's draft agreement for withdrawal from the EU, centred

on temporary membership of a customs union. Carney will inevitably be prepared

to shed light on how the Bank sees the relative impact of a customs union

compared to no deal scenarios, but will likely steer away from putting numbers

on the various scenarios.

     He told Morgan in a letter that he would provide the details "after the

negotiations between the Government and [European] Commission have concluded,

but in good time before any Parliamentary vote."

     The European Council meeting to finalise and formalise the Brexit agreement

is scheduled for Nov. 25, and if things proceed as planned this would mark the

end of negotiations.

     When the UK parliament will first vote on the agreement is not yet known,

with speculation ranging from as early as Nov. 27 on to Dec. 10 and even out to

just ahead of the Dec. 20 Christmas recess. To ensure the committee has the

analysis "in good time" to inform an early vote the Bank will have to deliver it

in the coming days.

     --NO DEAL BREXIT

     As external economists start to base their forecasts on a customs union, no

deal or produce bifurcated projections for both options, depending on political

developments, the MPC will not want to lag too far behind and run the risk of

producing irrelevant projections that could cast doubt over its monetary policy

guidance.

     In publishing scenario analysis for a no deal Brexit, which is explicitly

not the government's aim, the MPC will already be leaving itself open to charges

of overstepping its mandate - leaving Carney facing a delicate balancing act

when he gives evidence Tuesday.

     Other macro-forecasters have already taken a stab at estimating the impact

of no deal. The National Institute of Economic and Social Research latest

estimate is that UK growth in 2019 would be 1.9% in the case of a soft Brexit

but just 0.3% if EU membership ends next March in an orderly way but with no

deal and no transition period.

     Carney and his colleagues, however, will not want to make the headlines

with any similarly striking numbers. The Treasury Committee hearing starts at

10:00 GMT.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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