Bank defends recession remark

Governor of the Bank of England Mark Carney appearing on the BBC One current affairs programme, The Andrew Marr Show. PRESS ASSOCIATION Photo. Picture date: Sunday May 15, 2016. Carney has strongly defended his warning that a vote to leave the European Union could tip Britain into recession.
Governor of the Bank of England Mark Carney appearing on the BBC One current affairs programme, The Andrew Marr Show. PRESS ASSOCIATION Photo. Picture date: Sunday May 15, 2016. Carney has strongly defended his warning that a vote to leave the European Union could tip Britain into recession.
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The Bank of England’s Governor Mark Carney has defended his claim Britain could enter into recession if it left the European Union by saying his job is to identify risk and not naively “hope” financial problems will disappear.

Just days ago, Mr Carney faced calls for his resignation when he discussed the bank’s economic forecast covering the June 23 referendum period.

He said higher inflation, higher unemployment, a weaker pound, and a materially lower economy were all potential outcomes of Britain breaking away from Brussels.

In an interview with former BBC political editor Andrew Marr yesterday, he said his job was to “identify risks” and anyone in his position would not “cross [their] fingers and hope risks would go away”.

He denied his intervention had been politically motivated after the bank’s monetary policy committee warned of slower growth.

Instead he believes his actions have shown the duty expected of the bank’s governor and also show the lessons learnt from the financial crash of transparency and communicating the potential of risk.

“We don’t just have a responsibility to be fair and not pop up after the vote and say ‘Oh by the way this is what we thought at the time’ but we also have a responsibility to explain risk and then take steps, because by explaining what we would do to mitigate them we reduce them. That is the key point - ignoring a risk is not to reduce it,” he said.

“If we’re taking a judgment as a committee and changing policy because of it - we’re putting out billions of pounds of liquidity facilities, we’re getting banks to raise capital against these type of risks - if we are potentially going to change the path of interest rates or other instruments of monetary policy because of certain things manifested, we have a duty to explain that to the British people and to Parliament.”

However, the pro-Brexit Energy Minister Andrea Leadsom said his comments risked creating the financial instability it was supposed to prevent.

“It was an incredibly dangerous intervention. The core job of the Bank of England is to ensure financial stability. That’s it. That is their job,” she told The Andrew Marr Show.

Brexit campaigner and former Shadow Work and Pensions Secretary Iain Duncan Smith said Mr Carney’s comments were unsurprising as the Bank wants to keep the status quo.

Speaking on Andrew Neil’s Sunday Politics programme, he said: “If you’re going to be impartial, if you’re going to be fair, then you damn well better say something about what the alternative case is, and the threats of remaining are very clear.”

The official campaign to exit the EU, Vote Leave, was at the centre of another political storm yesterday after Boris Johnson said unifying Europeans under one governing body had been a parallel ambition of Adolf Hitler.

In an interview with the Sunday Telegraph, he said: “Napoleon, Hitler, various people tried this out, and it ends tragically.

“But fundamentally what is lacking is the eternal problem, which is that there is no underlying loyalty to the idea of Europe. There is no single authority that anybody respects or understands. That is causing this massive democratic void.”

It comes as Vote Leave launched a vicious response to ITV after campaigners including Mr Johnson and Michael Gove were not selected for a live debate and UK Independence Party Nigel Farage was chosen instead.