Carney to be quizzed by MPs on prospects for financial stability
MARK Carney is due to be questioned by MPs about the UK’s economic prospects as he appears before the Commons Treasury Committee for the first time since the election in May.
SNP MP George Kerevan, a new member of the panel, is expected to be among the Bank of England governor’s inquisitors who will focus on the outlook for the country’s financial stability.
Conservative MP and committee chairman Andrew Tyrie plans to lead questions on the bank’s leverage ratio, which is key measure of the Bank’s ability to deal with financial shocks.
He said: “The leverage ratio is an essential addition to the [Bank of England’s] toolkit for improving the stability of the financial system. A good deal of judgment is needed in its implementation and it is crucial the Bank exercises it.”
“The Treasury Committee will be asking questions of the Bank of England about the leverage ratio.”
It comes after the Canadian said it had worsened as the crisis facing debt-laden Greece deepened.
He is likely to face further questions from members of the Treasury Select Committee on the situation now a deal has been reached.
The €85 billion (£60bn) rescue package for Greece staves off the immediate threat of a euro exit and financial collapse.
Mr Carney warned of the potential impact of the crisis as the Bank published its Financial Stability Report a day after Greece missed a 1.6 billion euro (£1.1 billion) payment to the International Monetary Fund (IMF).
He said the direct exposure of UK banks and businesses to the country was minimal, but added: “In contrast, our economic and financial exposure to the euro area is considerable.”
Mr Carney said the Bank had been working with the Treasury, the Financial Conduct Authority (FCA) and authorities across Europe to draw up contingency plans.
The governor is also likely to face scrutiny over other aspects of the Financial Stability Report, which raised concerns about the risks that might be posed by the burgeoning buy-to-let market.
Mr Carney is also due be questioned about the Bank’s latest quarterly Inflation Report, published in May.
The report saw the Bank slash its forecast for UK economic growth this year to 2.5 per cent from 2.9 per cent as well as cutting predictions for 2016 and 2017.
Mr Carney saved his gloomiest language for productivity, which the Bank now thinks will grow even more weakly.