Bank’s reputation has been sullied
This newspaper wrote in August that Mark Carney should stay on for an extra year as Governor of the Bank of England, so long as he steered clear of politics. Unfortunately the last 48 hours have seen the Bank injected once again into a critical policy debate: how should MPS vote on Theresa May’s withdrawal deal? Minutes of internal meetings show that Bank officials had in fact been reluctant to publish dire figures that could undermine Britain’s negotiating position, warning that anything that looked like a precise, post-brexit economic scenario could be misleading and open to misinterpretation. So, why was it that this week several such withdrawal scenarios were published in terms that suggest everything but remaining in the EU will hurt the British economy?
Mr Carney says the information became public because MPS demanded it. Parliamentary sources say that it was only a friendly request. The issue here is motive. The establishment has coalesced around Mrs May’s deal and thus wishes to terrify the public and pressure MPS into voting it through. The Bank would assert that it’s only doing its job – but Mr Carney has form when it comes to allying with the government of the day. In 2016, he warned that simply voting for Brexit could lead to “a technical recession”. That prediction was completely wrong and is one of the main reasons why the public remains so cynical towards economists. And the latest doomsday scenarios most definitely err on the side of blind panic: even Paul Krugman, a Left-wing economist who opposes Brexit, said the Bank’s predictions have “gone pretty far out on a limb”.
If the Bank didn’t want its numbers to be misconstrued then it couldn’t have failed more miserably. Such a withdrawal assessment, released immediately after the Treasury’s forecasts, was always going to be embraced by Remainers; it was the duty of the Bank to emphasise loudly and clearly what its figures were not, rather than have Mr Carney go on the radio the following day and follow them up with a warning that the country is under-prepared for no-deal – as though it isn’t within the Government’s power to help correct this. Is Mr Carney doing politics? Or perhaps he can’t help but be interpreted as doing politics. Either way, the Bank’s reputation is sullied at a time when the UK desperately needs a perspective it can trust.