Bank Of England Warns On Economic Risk Of “Brexit”

Mark Carney, Governor of the Bank of England, has drawn the ire of the various “Leave” campaign groups by having the temerity to suggest that the UK could fall into a technical recession if the nation decides to cease its membership of the EU in next month’s referendum. Minutes from the latest meeting of the Monetary Policy Committee of the Bank of England noted that a vote to leave could lead to a fall in the value of Sterling, a reduction of UK growth and an increase in UK unemployment.

Supporters of the UK continuing its membership of the EU have seized on the comments as impartial evidence for their cause. PM David Cameron called the remarks “a very clear message” on the dangers of Brexit whilst Chancellor George Osborne noted: “The Bank is saying that it would face a trade-off between stabilizing inflation on one hand and stabilizing output and employment on the other. So either families would face lower incomes because inflation would be higher, or the economy would be weaker with a hit to jobs and livelihoods. This is a lose-lose situation for Britain. Either way, we’d be poorer.”

One of the Vote Leave campaign team, Tory MP Jacob Rees Mogg, called for Mr Carney’s resignation, noting: “I think it is unprecedented for the governor of a central bank to suggest that people should short his own currency. Suggesting sterling will fall sharply is simply not what responsible central bankers do”. Fellow Vote Leave campaigner and former Tory Chancellor, Lord Lamont all but accused the Governor of recklessness: “The governor should be careful that he doesn’t cause a crisis. If his unwise words become self-fulfilling, the responsibility will be the governor’s and the governor’s alone. A prudent governor would simply have said that ‘we are prepared for all eventualities’.”

These attacks were dismissed by a spokesman for the Bank of England who pointed out that the MPC had a duty to make its judgements known: “The Bank of England has not made, and will not make, any overall assessment of the economics of UK’s membership of the European Union. At the same time, the Bank must assess the implications of the UK’s EU membership for our ability to achieve our core objectives and we have a duty to report our evidence-based judgments to Parliament and to the public. That is the fundamental standard of an open and transparent central bank. Assessing and reporting major risks does not mean becoming involved in politics; rather it would be political to suppress important judgments which relate directly to the Bank’s remits and which influence our policy actions.”