On the eve of the 10-year anniversary of the Lehmans collapse, Mark Carney has warned a 'No-deal' Brexit could have similar catastrophic consequences.
According to the Guardian, the Bank of England governor gave Theresa May the bleak warning during a special cabinet meeting held on Thursday.
Carney told the prime minister and senior ministers that unemployment could reach double figures and house prices could fall between 25 and 35% if the UK fails to strike a deal with Europe.
He also warned that transport links with the EU such air travel and Eurostar could be damaged.
Carney is also said to have offered a prognosis for a second scenario, whereby the UK exits Europe on worse terms than May's Chequers plan.
One cabinet insider told the Guardian: 'The worse-than-no-deal scenario was very concerning, but it prompted a lot of broad agreement on the steps that we would need to take next to support the British economy in the event of leaving the EU on poor terms.'
Another said: 'The government wouldn’t just stand by. It didn’t in 2008. He wasn’t saying it was all going to happen but I think there is a recognition that you do have to contemplate the worst-case scenario.'
Carney's, who was roundly criticised by the Leave campaign for his grim UK exit forecasts ahead of the 2016 referendum, is once again risking the wrath of hardline Brexiteers with his latest gloomy prediction.
His warning came hot on the heels of a Moody's note, which described the potentially dire consequences of a No-deal Brexit.
'The immediate impact would likely be seen first in a sharp fall in the value of the British pound, leading to temporarily higher inflation and a squeeze on real wages over the two or three years following Brexit,' the ratings agency said.
'This in turn would weigh on consumer spending and depress growth, with a risk of the UK entering recession.'
A spokesperson for the prime minister said the government was ensuring it was ready for 'all possible scenarios'.
'Cabinet agreed that securing a deal with the EU based on the Chequers white paper was the government's firm aim and we are confident of success,' the spokesperson said.