Bleak analysis by the Governor of gloom

THE Bank of England yesterday claimed the EU referendum was the ‘largest immediate risk’ to global financial markets.

In a stark warning, it said it was ‘increasingly likely’ the pound would fall sharply in value after a vote to leave. The Bank even claimed households were putting off buying cars and houses because they were so nervous about the risks of Brexit.

But the bleak forecasts were immediately dismissed by Eurosceptics amid accusations that the Bank was taking sides in the EU debate.

The ominous predictions were contained in minutes of the final meeting of the Bank’s rate-setting monetary policy committee before next Thurs- day’s referendum. Opting to keep interest rates on hold at 0.5 per cent, officials – led by Governor Mark Carney – used the opportunity to step up their warnings about Brexit.

The Bank said that while consumer spending has been ‘solid’, it pointed to growing evidence that uncertainty had led households to delay decisions including ‘commercial and residential real estate transactions, car purchases and business investment’.

It pointed to data showing new car registrations had fallen in May, with house sales also dropping in April.

However, the Bank quickly conceded that the slight dip in house purchases ‘had largely been expected as the surge in activity ahead of the changes in the stamp duty regime unwound’. There was a rush to buy houses before April 1 when the Government increased the fee for second home owners and buy-to-let landlords.

Eurosceptics also pointed to official figures published by the Office for National Statistics earlier this week that showed property prices have continued to accelerate since April.

And although car sales have slowed slightly in the run-up to the referendum, business is still booming. Car sales actually rose 2.5 per cent to 203,585 in the year to May – the high-

est for that month since 2002, according to the Society of Motor Manufacturers and Traders. Professor Patrick Minford, a former adviser to Margaret Thatcher who co- chairs the Economists for Brexit group, said: ‘The Bank of England is talking down the economy. It has become part of Project Fear and is highly politicised.

‘It has bought into the Treasury consensus and is making doom and gloom predictions based on flawed and deceitful assumptions about Brexit which guarantee a bad result.’

John Longworth, the former boss of the British Chambers of Commerce – who was ousted after coming out in favour of Brexit – said the Bank’s latest warnings raised fresh questions about its judgment. He said: ‘The Bank of England governor is a public servant but is interfering with the political process. One has to wonder what his motivation is.’ Mr Longworth added: ‘Speculating about what the markets might do is like looking into a crystal ball.’

Eurosceptics also said the assessment was undermined by separate figures from the ONS which indicated that the referendum has not caused households to cut back on spending. In fact retail sales grew