The governor of the Bank of England Mark Carney told a House of Lords committee that the damage to the economy that a no-deal Brexit would cause is reducing.
This is thanks to contingency plans being put in place by the bank and the government.
The Bank of England warned in November 2018 that a no-deal Brexit would cause a loss of economic growth of between 4.75% and 7.75% in the three years afterwards, compared to the deal offered by the Prime Minister.
However, Mr Carney has revised this. He told the committee that thanks to contingency planning he expected the damage to be reduced to just 2.75% lower economic growth in the three years after Brexit in the best-case scenario.
This would equate to around £55 billion lost GDP.
In the worst case, the governor expects 4.25% lower growth compared to Theresa May's deal.
Mr Carney said: “Since we released the scenarios in November there have been some constructive developments in terms of preparedness.”
It is still assumed that both scenarios would be accompanied by a crash in the UK stock market, the collapse in value of the pound and significant friction for the moving of consumer goods across the border.
Meanwhile, Sky News reported yesterday that according to sources in the government the Department for International Trade is planning to slash import tariffs on as much as 90% of products in the event of a no-deal Brexit.
This would have the effect of instantly making imported consumer goods cheaper and would act as a stimulus to maintain shoppers’ confidence that they can continue to spend.
Several industries would however be protected from tariff changes, including car manufacturers, beef and dairy farmers, and certain textiles.
It is understood the government will publish the new tariff rates after the vote on the Prime Minister’s Brexit deal.