Mark Carney’s apparently rosy comments on Brexit have prompted controversy, with some reading them as a remarkable U-turn by the Bank of England governor, who has previously been held up as a “project fear” doom-monger.
“Brexit can lead to a new form of international cooperation and cross-border commerce built on a better balance of local and supranational authorities,” Carney said in a speech on Tuesday.
It could, he said, be “the first test of a new global order and could prove the acid test of whether a way can be found to broaden the benefits of openness, while enhancing democratic accountability.”
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Benefits of openness? Better balance of local and supranational? This all seems very much at odds with earlier comments from Carney that Brexit could wipe 8 per cent off GDP and that house prices could crash by as much as 35 per cent.
On the face of it, this is a conversion to rival Paul’s as he approached Damascus in AD5.
Yet the truth is, the headlines in the Eurosceptic press are based on small snippets of Carney’s remarks, with all context removed.
For one thing, the bank governor’s speech was about the global economy, not Brexit.
He talked about, among other things, the effects of a slowdown in China. Then he placed Brexit in the context of broader upheavals stemming from globalisation.
“Trade tensions abroad and Brexit debates at home are manifestations of fundamental pressures to reorder globalisation,” Carney said.
“It is possible that new rules of the road will be developed for a more inclusive and resilient global economy.”
But crucially he then laid out a second point that has conveniently been left out of a number of accounts: “At the same time, there is a risk that countries turn inwards, undercutting growth and prosperity for all.”
Carney’s approach here should not surprise anyone. He is an economist and a central banker, not a political pundit. In that role he doesn’t back one side of a debate or another; he puts forward a range of possible outcomes, based on analysis.
He is used to traders and market commentators poring over and dissecting his every word for a sign of where interest rates are heading, and so he deliberately gives little away.
But what about that project fear doom-mongering in months gone by?
As it happens, Carney didn’t say house prices would crash by 35 per cent or that GDP would drop 8 per cent in a year. In both cases he laid out a number of best, worst and middling scenarios.
The middle scenario rarely makes for the best headline.
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