Bank’s warnings on Brexit are ominous
PEOPLE across Wales who are worried about what Brexit could mean for their livelihoods and communities may have shivered when Bank of England Governor Mark Carney described the possibility of a no-deal exit as “uncomfortably high”.
His description of the consequences of such an exit as a “disruption to trade as we know it” will have ardent Brexiteers rolling their eyes. They will see this as a classic example of “project fear” and point back to some of the most apocalyptic warnings that were made ahead of the Brexit vote.
However, this does not mean that parties should not heed his advice to “do all things to avoid” leaving without a deal.
Mr Carney is also right to ensure that the Bank and the UK’s financial system is in the best possible position to withstand a shock.
As he put it: “We don’t want to have people worrying that they can’t get their money out.”
Bank of England governors generally choose their words and their public interventions with the very greatest of care. His decision to go public comes a day after the Bank increased interest rates and right before the PM’s meeting with French president Emmanuel Macron.
Mr Carney considers no-deal “highly undesirable” and even Brexiteers who favour the cleanest possible break with the EU will want to avoid post-exit chaos. It is in the interests of everyone to ensure that leaving the EU does not contribute towards an increase in unemployment, a slowdown in our already slow levels of growth, and a reduction in investment.
In Wales we have particularly strong trading links with the EU and anything which jeopardises or complicates the sale of goods can only weaken our competitiveness. This would be a blow we simply cannot take when our productivity and wages problems are so welldocumented.
Mr Carney described the potential of no-deal leading to “higher prices for a period of time”. When Wales has some of the lowest average earnings in the entire UK, it is irresponsible not to work to avoid a scenario which would leave struggling families suffering deprivation.
The Governor said the Bank’s job was “to make sure those issues don’t happen”.
Other people, especially those elected to Parliament and paid a handsome salary to defend the livelihoods and life chances of citizens, would do well to adopt a similar job description.