The Bank of England says the UK banking system is resilient and can withstand the potential impact of a disorderly Brexit.

The publication of the Financial Stability Report on Thursday suggests that the likelihood of no deal has increased, acknowledges the material risks of the scenario, but says the economy is now better prepared. That is even if Brexit takes place amidst an escalation of the Sino-American trade war.

Over the last year, UK lenders have bolstered their capital buffers by £1 trillion in liquid assets that should allow lenders to continue operating even if they were shut out of international markets for three months. In this worst-case scenario, the UK economy would shrink by 4.7%, unemployment would rise to 9.5% and property prices would fall by 33%.

The Bank did admit that the impact of a “no-deal” expectation is already making an impact in lower levels of investment in sectors such as commercial property, which is down by 38% compared to the last two-years average.

The owner of Virgin, Sir Richard Branson warned on Thursday that the pound would be massively devalued in the event of no-deal, plummeting to parity with the US dollar. “The pound was at $1.53 when the referendum took place; the pound today it is at $1.22, $1.23, and the pound will collapse to parity with the dollar if there is a hard Brexit,” Branson told the BBC.