Bank of England knew no-deal scenarios ‘could be misleading’
Carney had no obligation to release gloomy claims that colleagues feared were ‘against the public interest’
THE Bank of England admitted to concerns that its bleak no-deal Brexit predictions “could be misleading”, previously unreleased meeting minutes have revealed.
Mark Carney, the Governor, was accused of undermining the Bank’s credibility on Wednesday when he published analysis that claimed Britain could endure economic shock on a scale not seen since the Second World War in the event of a disorderly Brexit.
But meeting minutes reveal that the Bank harboured fears for more than a year that releasing such predictions was “against the public interest”.
The reluctance was because they feared that “a suggestion of apparently precise scenarios could be misleading and liable to misinterpretation”.
Last night The Daily Telegraph learnt that the Bank had been under no obligation to release the dire predictions of what might happen to the economy in the event of a “disruptive no-deal” Brexit.
The scenarios were only released following a request from Nicky Morgan, a prominent Remainer in her capacity as chairman of the Treasury select committee. Ms Morgan was a protégé of George Osborne, the former chancellor, who appointed Mr Carney as Governor. The Bank’s “doomsday” no-deal scenario predicts that the economy could shrink by eight per cent in a year and property prices fall by 30 per cent. It says the pound would lose 25pc of its value against the dollar and interest rates would soar. Jacob Rees-mogg MP, the prominent Brexiteer, labelled the publication “Project Hysteria”.
Now it has emerged that members of the Bank’s Financial Policy Committee had been reluctant to release the scenarios as they were worried they could be misconstrued and undermine the UK’S negotiations with the European Union. At no fewer than five separate meetings of the Bank’s Financial Policy Committee, the minutes noted that releasing the scenarios would be “against the public interest”. They also said that policymakers had not expected to publish discussion of Brexit scenarios “until after the United Kingdom had exited from the European Union”.
On Wednesday, Mr Carney stressed that the scenarios the Bank had presented were not forecasts and were only published because “Parliament had demanded it”.
This is at odds with the views of parliamentary sources, one of whom told The Telegraph that the letter from Ms Morgan asking for detailed analysis amounted to a “friendly request”.
It did not fall under parliamentary scrutiny powers to demand “people, papers and records” because it called for fresh bespoke analysis, they added.
Mr Carney defended the publication of the Bank’s Brexit scenarios in a BBC radio interview yesterday, saying that the warning of a recession in the event of no deal was not intended to scare people. He added: “We know from our contacts … that less than half the businesses in the country have initiated their contingency plans for a no-deal Brexit.”
Martin Beck, lead UK economist at Oxford Economics and a former Treasury official, said: “You have to ask to what extent is there some behind-thescenes political influence going on here? It’s all very convenient that it comes out the same day as the Treasury publication.”
David Jones, a former Brexit minister, told The Telegraph that the publication of the scenarios despite these reservations pointed to political influence that risked undermining the Bank’s independence. He said: “There was always concern the Bank of England analysis was politically inspired. This would appear to confirm this was the case. It is increasingly losing credibility.”