Mark Carney is wrong about the risks of Brexit
LIKE the man said, it’s no business of the Governor of the Bank of England to tell people how to vote in the EU referendum. But in effect Mark Carney went ahead and did just that. When the boss of Threadneedle Street told MPs that an exit vote could be a threat to Britain’s financial stability did he really think voters wouldn’t be influenced? Pull the other one, Mr Carney, it’s got euros on it.
His gloom and doom performance was music to the ears of those parts of the media which have a blind love affair with the EU.
News bulletins and frontpage headlines that proclaim the possibility of uncertainty if we leave the EU are guaranteed to put the wind up people. All the more so because most will assume that someone who runs the Bank of England must know what he is talking about.
The problem is that economics is an art not a science. There are no certainties. Indeed former US president Ronald Reagan used to say that if Trivial Pursuit had been designed by economists it would have 100 questions and 3,000 answers. Mr Carney, 51 next Tuesday, is an economist.
In fairness to him his remarks were cautiously tempered all the way through with coulds and mights, ifs and maybes. He even put the other side of the argument that there are also risks if we stay in the EU, posed by what he called “the unfinished business of European monetary union.” Sounds menacing, that.
BUT when he described leaving the EU as the “biggest domestic risk to financial stability” he must have known how massively that would swing the scales in favour of the Remain camp. So was he leaned on by David Cameron?
Both he and Downing Street deny any improper pressure although the governor does admit he and the PM have had discussions about our relationship with the EU.
I tend to trust Mr Carney on this more than I trust Downing Street, especially after the appalling way they put the boot into John Longworth, the former bosses’ leader who committed the dastardly crime of having a contrary opinion and expressing it. However where I can’t place validity on Mr Carney’s words is when it comes to his analysis of the consequences of Brexit.
On his major points experts in the City say he is just plain wrong.
He warns that banks and businesses will desert London and relocate in Europe. He says there will be uncertainty over investment in Britain that could impact on interest rates and sterling. He says we will lose our power to influence the way Europe regulates the financial sector.
Three powerful reasons for remaining in the EU, you might think. So let us inject some facts into those opinions. For a start Britain’s financial services sector is global not EU- parochial. In fact we have a considerably bigger share of the international market than either the American or the EU economies.
The City of London is in the big league – it adds £ 45billion a year to our country’s wealth – and that gives it almighty clout. It is why half the world’s biggest financial firms have their European HQs here.
The City’s success has little to do with us being in the EU. It is based on the huge skills and expertise that have built up over many years and the fact that London sits in a time zone which perfectly straddles both Asian and American business hours. Frank Sinatra may have sung the praises of New York but it is London that really has the City that never sleeps.
And because of our glorious globe- trotting history English is the international language of world business. I doubt Mr Carney would claim any of this would change if we left the EU.
Then there is the inescapable conclusion that the EU financial services sector – which depends on London for nearly a quarter of its income and 40 per cent of its exports – needs us more than we need it.
If the EU decided to play dirty after a Brexit it would do so at considerable cost to itself.
FINALLY Mr Carney raises the spectre of banks pulling out of Britain. Why would they when Britain is such is a great place to do business with competitive tax rates, a world- leading legal system and a highly- skilled workforce? Barclays, HSBC and Lloyds have all said they are indifferent about whether we are in or out of the EU.
At least Mr Carney warned of the risks if we vote to stay in the EU. Socialist Europe ( let us not forget most EU leaders are almost as far Left as Jeremy Corbyn) has a cultural hang- up with free markets and competition. That is why Brussels loves issuing red tape to stifle initiative.
The EU wants to dictate how much we are allowed to pay our wealth creators. It wants to slap a damaging tax on every financial transaction.
It hates the idea that we should be able to set stringent rules which make our banking sector safer and more competitive ( and hence more attractive to investors) than theirs.
If being Governor endows a man with special wisdom, then we should listen to Mervyn King, who held the job for 10 years.
Lord King says the eurozone is doomed and will lurch from crisis to crisis unless it is broken up, warning: “Monetary union has created a conflict between a centralised elite on the one hand and the forces of democracy at the national level on the other. This is extraordinarily dangerous.”
Staying in is simply asking for trouble, Mr Carney.
‘ Staying in the EU is
asking for trouble’