BoE’s Carney exchanges Brexit fear forhope
Brexit could be a springboard to a “new global order” of free trade, the governor of the Bank of England said Tuesday, in a significant shift of tone about Britain’s future outside of the EU. In stark contrast to his repeated warnings about the economy over the past three years, Mark Carney said Brexit could usher in a golden era of “international cooperation and cross-border commerce.” Three months ago he was accused of whipping up “Project Hysteria” when he said a chaotic no-deal Brexit could tip the U.K. into deep recession, reduce property prices by a third and drive up inflation, interest rates and unemployment. On Tuesday, however, he said post-Brexit Britain could be a catalyst for a more democratic trade era with small businesses getting a bigger share of the markets dominated by multinationals. It came as the prime minister’s chief Brexit negotiator was overheard saying MPs would be given a choice of a revised deal or a delay to Article 50 in comments that suggested no deal had secretly been taken off the table.
Olly Robbins is reported to have told a companion in a Brussels bar that “if they don’t vote for the deal then the extension is a long one.” British Prime Minister Theresa May was accused of “running down the clock” to force MPs into backing a Brexit deal, as it emerged a parliamentary vote on a revised deal could be delayed until the last week of March. Hopes of cross-party agreement appeared to evaporate as Jeremy Corbyn said May wanted to “blackmail” MPs by leaving them no alternative but her deal or no deal.
In the referendum campaign of 2016, Carney was accused of supporting Remain, predicting a “material” slowdown in the U.K. economy and a “technical recession” if Britain voted Leave. In contrast, he told an event Tuesday in London that global trade had helped perpetuate inequality in wealth and income, lack of democracy, trust and serious financial imbalances, which could be addressed by Brexit. He said it could be “the first test of a new global order and could prove the acid test of whether a way can be found to broaden the benefits of openness, while enhancing democratic accountability.”
It could even address the democratic deficit, shifting from “prescriptive supranational rules,” such as those set out by the EU, to “more differentiated, national approaches to achieve common outcomes.” But he also warned that countries could turn inwards, undercutting growth and prosperity. “Concerns are already impairing investment, jobs and growth, creating a dynamic that could become self-fulfilling,” he said, adding that business investment had not grown since the referendum. The US -China trade war, an expression of dissatisfaction with existing systems, threatened global economic growth. Protectionism appeared to be having an impact, he added. So far the trade war had affected just the U.S. and China, but increased tariffs would have a bigger effect on growth: “This could lead to an economic crunch the likes of which have not been seen since the Seventies.” The result could be slow growth, interest rate rises and more pressure on indebted firms, families and government.