Bank of England’s Carney hits back at critics of Brexit scenarios
Bank of England Governor Mark Carney defended the central bank’s projections for the potentially major economic impact of Brexit which angered some lawmakers opposed to Prime Minister Theresa May’s plans for leaving the European Union.
The BoE said last week that under a worst-case scenario, Britain could suffer an even bigger hit to its economy than during the global financial crisis.
Carney told lawmakers on Tuesday that the scenarios set out by the BoE reflected preparatory work to ensure banks and other lenders were ready for Brexit, and were not off-the-cuff forecasts.
“There’s no exam crisis. We didn’t just stay up all night and write a letter to the Treasury Committee,” Carney told lawmakers at a hearing in parliament. “You asked for something that we had, and we brought it, and we gave it to you.”
Pro-Brexit critics of Carney, who have long accused him of political meddling, dismissed last week’s report as scare-mongering.
Former BoE Governor Mervyn King joined the criticism on Tuesday when he lamented the central bank’s involvement in what he said was an attempt to scare the country about Brexit.
“It saddens me to see the Bank of England unnecessarily drawn into this project,” King said in an article published on Bloomberg.
Carney stressed the worst-case scenarios were “low-probability events in the context of Brexit” which the central bank needed to consider to make sure Britain’s banking system could withstand any Brexit shocks.
“What you should take away from the worst-case Brexit scenarios is that the UK banking system has the capital, separately detailed the liquidity, the overall resilience to withstand that and be part of the solution not the problem,” he said.
Less than four months before Brexit, it remains unclear whether Britain will leave the EU with a transition deal to smooth the shock for the economy.
May agreed a plan with EU leaders last month but it faces deep opposition in parliament including from within May’s own Conservative Party. The plan faces a key vote on Dec. 11.