A no-dealBrexit could lead to a financial crisis as bad as the crash in 2008, the governor of the Bank of England has warned.
Mark Carney told Theresa May and senior ministers that not getting a deal with the European Union would lead to a number of negative economic consequences.
It is also understood that Mr Carney warned house prices could fall by up to 35 per cent over three years in a worst case scenario, an event that could cause the value of sterling to plummet and force the bank to push up interest rates.
His bleak prognosis came as France said it could halt flights and Eurostar trains from the UK if there was no agreement when Britain leaves the EU in March 2019.
The Bank of England declined to comment on Mr Carney’s briefing to ministers.
Following the three-and-a-half hour meeting of the cabinet, a Downing Street spokesman said ministers remained confident of securing a Brexit agreement, but had agreed to “ramp up” their no-deal planning.
“As a responsible government, we need to plan for every eventuality. The cabinet agreed that no-deal remains an unlikely but possible scenario in six months’ time,” the spokesman said.
Mr Raab said ministers were putting in place measures to manage the risks in the event of no-deal, but acknowledged there would be some “disruption” if there was no agreement.
“We need to be honest about this. In the event of a no-deal scenario, which is not what we want, we would face short-term risks and short-term disruption,” he told BBC News.
The warning came as the government released its latest tranche of 28 technical papers on the no-deal preparations.
They include advice to motorists that they may need to obtain an international driving permit to continue driving on the other side of the Channel if the EU refuses to recognise UK licences.
British drivers who fail to obtain the correct documents may be turned away at borders or face enforcement action, the papers warn.
Agencies contributed to this report
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