UK Chancellor of the Exchequer Sajid Javid is pledging a major fiscal response if Britain leaves the European Union without a deal.
Javid said he’s looking at ways to help the economy, and indicated he expects the Bank of England would also assess the need for monetary support – though he noted that would be a decision for policy makers at the central bank.
“If it was no deal, there would be a significant economic policy response,” Javid said on BBC Radio 4 on Monday. “The independent Bank of England will almost certainly think about a monetary policy response, and that’s for them. But I will be thinking about a fiscal and other economic policy response.”
Talk of a BOE interest-rate cut has increased since late last week, when policy maker Michael Saunders said Brexit uncertainties are likely to keep depressing growth. He said the central bank may have to cut rates even if the UK avoids a no-deal outcome.
Asked about the cost to the economy, Javid said there would be challenges, but added: “I don’t think anyone really knows the full proper answer to that question.” That’s because the analysis hasn’t taken into account the potential response of the Treasury and the BOE, he said.
“No one really knows, because they couldn’t know, what the economic policy response would be,” Javid said. “I have never pretended that if you leave without a deal, that it won’t be challenging.”
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