Remainer banker Mark Carney U-turned on Brexit panic: ‘Could be conceptual positive’
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Mr Carney divided opinion during his seven years at the BoE, and particularly sparked anger from those on the Leave campaign for comments he made during the referendum debate five years ago. His involvement in the conversation saw accusations the Bank was becoming “too political”. These suggestions were shot down by Mr Carney who told a House of Lords committee in 2016 “it would be political to suppress important judgements”.
In the lead-up to the historic vote, Mr Carney described Brexit as the UK’s “biggest domestic risk”, while arguing a vote to leave could cause a recession.
But as the row simmered, and the UK began its negotiations on leaving the EU, with talks between the parties bringing stability to the financial sector, Mr Carney performed a dramatic U-turn as he admitted there were potential boosts the economy could experience from Brexit.
He said that “in an environment where everything is getting a fresh look it’s fertile ground for taking a step back and making bigger changes than otherwise might have been made”.
His comments came after Prime Minister Boris Johnson claimed his election win, and vowed to “level up” regions that were further behind London.
He also gave the green light to HS2, then expected to cost around £100billion, leading Mr Carney to suggest that such pledges could show the Government was ready to boost the nation’s economy outside the EU.
Weeks before last year’s Budget, Mr Carney said that there were “several initiatives… that suggest that some of these opportunities are being grasped”.
He also said Brexit could be a “conceptual positive”, adding: “It is a major reordering of our relationship not just with the European Union but our trading relationships with the rest of the world and it is prompting a reassessment of economic policy, structural economic policy in the country.”
It was a stark contrast to his comments during, and after, the 2016 vote, in which he took the Remain-view that the country could be savaged financially if we chose to leave.
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In 2019, as the UK battled to secure a deal with the EU over its exit, Mr Carney claimed that if Britain didn’t secure a pact, “instantaneous” economic impacts would be felt.
He argued that there would be disruption at the nation’s border, which could make a “substantial number” of firms “no longer economic”.
The BoE chief added: “In a disorderly Brexit, demand for UK assets could be expected to fall sharply, depreciating sterling and tightening financial conditions for UK households and businesses through adjustments in equity prices and corporate and bank funding costs.”
Mr Carney’s comments ahead of the referendum were analysed by Kamal Ahmed, then-BBC economic editor, who said the governor knew he would face “shark-infested waters”.
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Mr Carney would, Mr Ahmed suggested, be aware that the Remain camp would “grab all his negative comments about Brexit and trumpet them as a victory”.
Meanwhile he knew Leavers would attack him for “being deliberately partisan in his approach to the value or otherwise of the EU to the British economy”.
After a trade deal was secured by Mr Johnson and his counterpart, Ursula von der Leyen – the European Commission’s President, the Prime Minister did confess the pact had failed to live up to his ambition for the finance sector.
More recently, CityUK – the City of London’s influential lobby group – demanded the EU give “regulatory equivalence” to the industry, arguing it was “in the interests of customers and clients in the EU”.
And Gerard Lyons, an economist, wrote in the Spectator recently that EU regulators are “trying to create a walled garden”, claiming that “we may see a repeat of the trend of half a century ago when tougher regulations in the US saw business flow to London with the growth of the euro-dollar market”.
He explained that even for those who remain “negative about Brexit”, the City’s “inherent characteristics are acknowledged as being Brexit-proof”.
He added: “London has proved to be a good place to do business in, and from, hence its global appeal.
“Its regulatory environment is vital — as the Governor of the Bank of England made clear, the UK should not be a rule taker.
“In fact, it has the ability to make the most of its opportunity to diverge, if needed. At the same time, the UK will continue to help set the agenda at the global level, vital for the raft of firms in the City.”
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