Governor warned: Keep out of EU row

MARK Carney was last night warned not to take sides in the debate over Britain’s future in the European Union.

The central bank governor will tomorrow be quizzed by MPs over the economic and financial costs and benefits of the UK’s EU membership.

Downing Street will be hoping the Bank will come out in favour of staying in the Brussels club – or at least outline the risks of leaving. But economists and Eurosceptics warned that appearing to take sides in the politically charged campaign would be a mistake for the central bank.

‘I don’t think the Bank should get into this topic at all,’ said Tony Yates, professor of economics at the University of Birmingham who worked for the Bank of Eng- land for 20 years. ‘ They should stay well out of it.’

Prof Yates warned that commenting on ‘ such a matter of political controversy’ could undermine the central bank’s independence. The Bank has agreed to publish its analysis of the Prime Minister’s deal with Brussels and, crucially, the extent to which the City of London is protected from oppressive regulation from the eurozone.

Mr Carney and one of his deputies, Sir Jon Cunliffe, will be quizzed by MPs on the Treasury Select Committee. Its chairman, Andrew Tyrie, said: ‘ The Government – as they appear to have done with the Scottish referendum – will probably be encouraging the gover- nor and the Bank to go as far as they can. The Bank will want to limit itself to analysis that has a direct bearing on its mandate.’

The Bank landed itself in hot water in October last year when it published a report entitled EU Membership And The Bank Of England that was seen by many to favour continued membership. At the time, Mr Carney declared the UK was a ‘leading beneficiary’ of the EU in comments that delighted Downing Street.

The Governor also said Britain must secure ‘safeguards’ to protect non-euro countries from new rules designed to save the crisistorn single currency bloc.

Chancellor George Osborne described it as a ‘very impressive’ speech. But i t sparked outrage among critics who accused the governor of meddling in the debate over Britain’s future in Europe.

At the time, Lord Lawson, a former chancellor and a prominent campaigner to leave the EU, described it as ‘regrettable’ and added: ‘I have known many governors over the years and I can’t think of any who would wade in, in a political way, on an issue such as this.’

Prof Yates yesterday said the October report ‘was a big step too far’ and urged the Bank to be cautious in the coming weeks. ‘Once you get closer and closer to a political event you should say less and less,’ he said.

Ukip MP Douglas Carswell said: ‘The governor should be focusing on making sure Britain’s banking system is secure rather than telling us whether or not we should be an independent country.’