Business World

Thursday 22 February 2018

Carney can't escape from politics of Brexit

Bank of England governor Mark Carney. Photo: Bloomberg
Bank of England governor Mark Carney. Photo: Bloomberg

Emma Charlton

Mark Carney's scope to sidestep Brexit is dwindling. With a referendum on Britain's European Union membership looming, the Bank of England governor has spent months trying to skirt the charged debate.

An appearance before MPs today may throw him right in, as happened before the Scottish independence vote when his comments were hijacked by campaigners from both sides.

The stakes are high, with Goldman Sachs Group and BlackRock among those warning the vote puts trade and investment at risk and many economists saying the full implications of an exit are almost impossible to quantify.

While Mr Carney  has said there's little evidence of an economic impact so far, some surveys signal the uncertainty is already having a detrimental effect. "The governor will simply have to give a view," said Philip Shaw, an economist at Investec Securities in London. "It'll be very difficult to avoid specific questions about trade access and the potential impact on growth, inward investment, the prospects for the financial sector. He'll be fairly frank, I don't think there's any avoiding it."

Mr Carney and deputy governor Jon Cunliffe will testify at Westminister's Treasury Committee today on the economic and financial costs and benefits of EU membership.

In a report in October, the central bank considered the impact of membership on its mandate, but didn't give a detailed assessment of the merits or the implications of an exit.

That hasn't stopped political point-scoring, with Chancellor of the Exchequer George Osborne hailing the document as being in line with the government's thinking that the UK should remain. Eurosceptic lawmaker and Treasury Committee member Steve Baker said the same document was a "clear warning" about the risk of power transfer to Brussels.

Last month, Prime Minister David Cameron hinted he wants to see the BOE go further with its analysis, saying it should "set out the figures so people can make a judgment".

"It's a political forum - the questions will be quite wide-ranging and that could be difficult for him," said Ross Walker, an economist at Royal Bank of Scotland in London.

"His language will be cautious and technical and maybe a bit dry, but in terms of identifying the risks, that might tend to reinforce the view of someone who is more cautious about a UK exit." (Bloomberg)

Irish Independent

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