Mr Carney must stop fuelling Project Fear
What was the point of Mark Carney’s presentation to Cabinet this week? It was reported that the Governor of the Bank of England told ministers to prepare for house prices falling by a third if Britain walks away from the EU without a deal. Mr Carney’s remarks leaked out and a storm broke: a no-deal Brexit means disaster for the economy! Until quieter voices pointed out that Mr Carney has warned about house prices before, so this is nothing new; that it’s the job of the Bank to stress test the banking system for literally any crisis, no matter how improbable; and, most importantly, that the Bank has not made a forecast for a no-deal Brexit. So why did Mr Carney and No 10 allow all these alarmist headlines to travel halfway around the world without correction?
The sad conclusion is that Project Fear is still up and running. Its new obsession is stacking public opinion against a no-deal Brexit, but its modus operandi is unchanged: put out the worst-case scenario, accentuate the negative; if countered, retreat into a supercilious “no comment”. Hyperbolic predictions are delivered with the stamp of expertise: “These are simply the facts, and you can’t argue with those.”
But you can argue with guesses based on silly predictions that don’t reflect the world we live in. If the economy stumbled after Brexit, are we to believe that the Government would do nothing? There would be small tax cuts, at the very least. And what does “no deal” even mean? There would be lots of mini-deals to cover necessities such as air flights, food and medicine – because the alternative, the scenario that Remainers seem to believe is on the table, would be enormously damaging to the rest of the continent. It could almost be an act of war, a kind of inhumane blockade. And were that within the realms of plausibility, it would suggest that for four decades we haven’t been a member state of the EU so much as its hostage. Why would anyone want to remain part of such an institution?
The answer is a fear of change mixed with a frustration with the voters. The establishment is angry that the voters forced Brexit on them. We were given a referendum on the understanding that we’d vote Remain; instead, we rejected the experts’ advice (including the Bank of England’s) and forced a rethink on everything from trade to immigration. Smarter politicians have accepted that result and tried to address those issues.
But in many parts of the establishment, there is pessimism, foot-dragging and outright denial. They emphasise the negatives of a no-deal outcome to frighten the public into swallowing a compromise that keeps us in the EU in all but name. Some Brexiteers insist Chequers is even worse than that: we’d be rule-takers with no influence.
Very few Leavers want a no-deal Brexit. They see it, correctly, as a fallback option. It is, paradoxically, at once a threat (push us too far and we’ll walk) and, if only the Bank and the Treasury could see it, an opportunity. Whatever short-term ruptures occur, in the long run it could offer a chance to rebalance the British economy in favour of developing markets – of the sort that the Prime Minister explored on her recent tour of Africa. It is also conceivable that a no-deal outcome turns out to be unavoidable. Emily Thornberry, the shadow foreign secretary, has suggested that Labour MPS would vote against any deal brokered by Theresa May. Labour might gamble everything on forcing a general election, but if they defeat Chequers they could see Britain out the door without any comprehensive agreement on a future relationship.
It is time that Mr Carney made it clear that he has not forecast doomsday, and time for the Prime Minister to inject some optimism into the conversation. Mrs May’s insistence that a no-deal Brexit would not be the end of the world is insufficient: she needs to show that the country is prepared for it, that on balance everything will be fine and the Government is ready for the challenge. Her job is not only to manage the country’s affairs but to lead it.
Project Fear is still up and running. Its new obsession is stacking public opinion against a no-deal Brexit