Bank of England governor Mark Carney today issued a fresh warning that shopping bills could soar 10 per cent and hundreds of thousands of jobs risk the axe if Britain crashes out of the EU.
He also rejected criticism of the bank’s warnings last week of the economic dangers of a “no deal”.
But his predecessor Mervyn King said he was “saddened” by the analysis.
The Commons Treasury committee asked Mr Carney about the impact on food prices.
He told the MPs: “In the most extreme scenario, on average your shopping bill goes up 10 per cent … if you go to a more orderly scenario with a transition then it’s something around the six per cent range.”
A Bank of England agents’ survey suggested firms expect employment to fall by between 2.1 and 5.4 per cent in a “no deal and no transition” Brexit, but to rise by between 0.2 and one per cent if a deal and transition are agreed.
Giving evidence to the MPs, Andrew Sentance, an ex-member of the bank’s monetary policy committee, accused the bank and the Government of exaggerating the blow of “no deal”, and branded their analysis as “politically motivated to some degree”.
Mr Carney rejected criticism of the decision to publish, saying the evidence was requested by the Treasury committee.
He said the analysis was “well-grounded”, with a core team of 20 senior economists working on it for two years, using 600,000 underlying observations.
Lord King told Bloomberg: “It saddens me to see the Bank unnecessarily drawn into this project.”
He also accused the Government of “monumental incompetence” which he said would leave Britain in a “state of fiefdom”.
