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Bank of England governor denies being politically biased over Brexit - live updates Bank of England governor denies being politically biased over Brexit - live updates
(35 minutes later)
11.39am BST
11:39
During a long discussion on sterling, Ben Broadbent suggests that the pound could fall by 5% if Britain votes to leave the EU.
Updated
at 11.39am BST
11.38am BST
11:38
23% of undecideds trust Mark, only 1% trust George! #EUref : Carney doubles down on Brexit recession risk warning https://t.co/xni2Vns8uV
11.28am BST
11:28
Ben Chu of the Independent says that Mark Carney has “doubled down” on his concerns over the EU referendum this morning.
And that could be significant, as opinion polls have found that the public trust the Bank of England governor more than Westminster’s best and brightest.
Ben writes:
The Governor of the Bank of England, one of the most trusted public figures in the UK, has sounded another warning about the instant economic shock Brexit would inflict on Britain.
Speaking in front of MPs on the Treasury Select Committee, Mark Carney, who recent polling suggested is more trusted among the public than senior politicians, said: “Brexit to my mind would have a material impact on growth and inflation. It would be likely to have a negative impact in the short term.”
Following up on his words earlier this month, Mr Carney added: “I certainly think that would increase the risk of recession.”
Mr Carney’s warning follows a stark warning from the Chancellor yesterday, citing Treasury economic analysis, that Brexit would lead to an immediate year-long recession for the UK.
More here:
Carney doubles down on Brexit recession risk warning in front of MPs https://t.co/Hv8LioPJdl
11.25am BST
11:25
Asked about recent movements in the pound, Mark Carney says sterling has been tracking the probability of Britain leaving the EU (rising when Brexit looks less likely).
11.19am BST
11:19
Mark Carney had early look at Treasury's Brexit work
This may not reassure critics of the Bank’s independence....
Carney reveals he saw a copy of the HMT report two weeks ago at breakfast with the Chancellor
Osborne gave Carney an advance copy of the Treasury document on Brexit over breakfast - Carney says there was no collaboration
Carney says he saw the draft version, because it included economic forecasts, but he didn’t give any feedback.
Deputy governor Ben Broadbent, though, says he’s hardly looked at the Treasury’s analysis at all (which warns that Brexit would cause a DIY recession)
Updated
at 11.23am BST
11.16am BST
11:16
John Mann MP now takes up the issue of the Bank’s independence (or lack of) over Brexit.
He says the external members of the Monetary Policy Committee – Martin Weale and Gertjan Vlieghe – are being accused of simply “doing whatever the governor tells you to do”.
Weale points out that he’s often disagreed with the rest of the committee, by voting to raise interest rates in recent years (before changing his mind).
Q: But why aren’t the external members at the Bank speaking up against these slurs on your integrity?
Vlieghe says he does resent the implication that the committee are under the control of Mark Carney, or George Osborne. He insists that there’s no secretive control of the Bank.
No-one has told me, or asked me, about which way these discussions should go.
Mann suggests that if the MPC’s external members are truly independent, they should speak up a bit.
Labour's @JohnMannMP suggests BoE's external MPC members are doing Mark Carney's bidding. They politely disagree. pic.twitter.com/wr8Uu97Z95
11.10am BST
11:10
Perhaps sensibly, Mark Carney declines to comment on the Brexit analysis issued by the Treasury yesterday, which predicted four quarters of recession.
11.08am BST
11:08
Mark Carney then warns that a vote to leave the EU could prompt a ‘Pavolvian’ reaction in the City, pushing up the risk premium on UK assets.
But it would also be hard to the Bank to stimulate the economy, if a weaker pound drove up inflation.
Financial markets have an "almost Pavlovian response to bad news", Mark Carney tells @RachelReevesMP.
Carney: After #Brexit, ex rate/supply side shock wld put upward pressure on inflation, reducing likelihood of stimulus even if econ slows.
11.03am BST11.03am BST
11:0311:03
Rachel Reeves then questions Mark Carney about the implications of Britain leaving the EU.Rachel Reeves then questions Mark Carney about the implications of Britain leaving the EU.
Mark Carney agrees that Brexit could cause the pound to weaken, creating an upside shock to inflation that would make it harder to keep interest rates low.Mark Carney agrees that Brexit could cause the pound to weaken, creating an upside shock to inflation that would make it harder to keep interest rates low.
If Britain stays in the EU, the next move in interest rates is probably up. If the public vote to leave, there’s less chance of a rate rise.If Britain stays in the EU, the next move in interest rates is probably up. If the public vote to leave, there’s less chance of a rate rise.
Deputy governor Ben Broadbent then points out that the UK economy appears to have slowed quite sharply this year - it’s unclear how much of this is due to Brexit fears.Deputy governor Ben Broadbent then points out that the UK economy appears to have slowed quite sharply this year - it’s unclear how much of this is due to Brexit fears.
10.58am BST10.58am BST
10:5810:58
Committee chairman Andrew Tyrie steps in -- perhaps worried that Mark Carney and Jacob Rees-Mogg might take their argument outside.Committee chairman Andrew Tyrie steps in -- perhaps worried that Mark Carney and Jacob Rees-Mogg might take their argument outside.
He tells the BoE governor that many members of the commitee would have been concerned if the Bank had NOT discussed the EU referendum.He tells the BoE governor that many members of the commitee would have been concerned if the Bank had NOT discussed the EU referendum.
Labour MP Rachel Reeves than puts the boot into Rees-Mogg, saying:Labour MP Rachel Reeves than puts the boot into Rees-Mogg, saying:
If anyone’s reputation has been damaged by today’s performance, it’s not the Bank of England.If anyone’s reputation has been damaged by today’s performance, it’s not the Bank of England.
Carney be like pic.twitter.com/Oft0ElUXbLCarney be like pic.twitter.com/Oft0ElUXbL
Carney 3 Rees-Mogg 0Carney 3 Rees-Mogg 0
UpdatedUpdated
at 11.00am BSTat 11.00am BST
10.50am BST10.50am BST
10:5010:50
Carney accused of 'political involvement' over Brexit.Carney accused of 'political involvement' over Brexit.
Jacob Rees-Mogg MP now accuses Carney of being influenced by chancellor George Osborne.Jacob Rees-Mogg MP now accuses Carney of being influenced by chancellor George Osborne.
As the gloves come off, Carney insists that he’s not being played by government.As the gloves come off, Carney insists that he’s not being played by government.
There’s “no possibility of undue influence from the Treasury”, Carney insists. It wouldn’t work anyway, even if they triedThere’s “no possibility of undue influence from the Treasury”, Carney insists. It wouldn’t work anyway, even if they tried
Rees-Mogg repeatedly trying to establish HMT influence over the Bank of England. "There is no possibility of undue influence", says Carney.Rees-Mogg repeatedly trying to establish HMT influence over the Bank of England. "There is no possibility of undue influence", says Carney.
Q: So it’s terribly convenient that you’re taking exactly the same position as the Treasury? Q: So it’s very convenient that you’re putting out the same propaganda as the Chancellor?
I don’t accept that at all. I don’t accept that at all, Carney replies.
Q: But you have a duty to remain apolitical. How can anyone trust you on interest rates now?Q: But you have a duty to remain apolitical. How can anyone trust you on interest rates now?
Our comments might not please you, Carney shoots back, but it has improved the chances of the economy recovering from the Brexit undertainty.Our comments might not please you, Carney shoots back, but it has improved the chances of the economy recovering from the Brexit undertainty.
To suggest otherwise is to try to undermine it.To suggest otherwise is to try to undermine it.
Rees Mogg insists that Carney has become politically involved...Rees Mogg insists that Carney has become politically involved...
I don’t think it’s worth replying to, says Carney, trying to swat the pro-Brexit MP aside.I don’t think it’s worth replying to, says Carney, trying to swat the pro-Brexit MP aside.
Rees-Mogg leaves Carney speechless after accusing him of getting "politically involved". "I don't think that's worth replying to" #eurefRees-Mogg leaves Carney speechless after accusing him of getting "politically involved". "I don't think that's worth replying to" #euref
10.44am BST
10:44
Q: What contact have you had with George Osborne about the referendum?
Mark Carney says he has had a series of conversations around how membership of the EU allows the bank to achieve its monetary targets.
Ultimately we can achieve the inflation target whether we’re in the EU or not.
And there have also been conversations about the impact of Brexit on financial stability, and on the mechanics of potentially exiting the EU, Carney says.
Q: How would any directions from the government come?
I’d expect it in writing, and in public, Carney says - he wouldn’t accept ‘informal direction’.
10.39am BST
10:39
Mark Carney warns that sterling has been hit since November by the single issue of whether Britain stays in the EU, or leaves.
That’s why the Bank was right to flag up that the referendum could change monetary policy, he argues.
Rees-Mogg isn’t impressed: pointing out that a Labour government in his lifetime proposed re-introducing capital controls. Yet the Bank wouldn’t give a view on a general election - but here it is, wading into the referendum issue.
Your comparison is essentially false, he tells Carney.
10.35am BST
10:35
Now Jacob Rees-Mogg MP, a pro-Brexit MP, takes the microphone.
Q: In general elections, you don’t give a view on opposition policies, so why is the Bank giving its view on Brexit?
Carney explains that the EU referendum is a single event that creates a ‘discrete risk’ to monetary policy, while a general election does not, as policies are implemented over time.
Q: But a change of government is a discrete event, Rees-Mogg gently insists. You get a new economic policy and a new chancellor.
Carney argue that it’s still not a single event whose impact can be clearly identified.
10.23am BST
10:23
Carney in Treasury committee: no member of the MPC or FPC disagrees with their collective assessment of likely Brexit impact - 20 people
10.22am BST
10:22
Bank of England united over Brexit recession fears
The Treasury committee now turns to other top officials from the Bank of England.
First Martin Weale, who sits on the monetary policy committee which sets interest rates. He says Brexit would probably have a materially negative impact on growth and inflation, in the short term.
And that would increase the risk of recession, Weale adds.
Dr Gertjan Vleighe, another independent MPC member agrees.
It is likely that there would be a material slowing in growth, inflation would rise, the exchange rate would fall, if Britain votes to leave the EU, Vleighe explains.
Ben Broadband, deputy governor, says he agrees too.
Q: So is there anyone on the MPC who disagrees?
Governor Mark Carney says there isn’t - the Committee is united on this one.
Q: How about the Financial Policy Committee? (responsible for financial stability).
Carney says they are also concerned about the referendum:
It is the consensus view of the FPC that Brexit represents the biggest domestic risk to financial stability.
Q: And there are no dissenters on the FPC either?
No, Carney replies.
UpdatedUpdated
at 10.23am BST at 11.31am BST
10.16am BST
10:16
The key points so far:
Tyrie: Do you think it's a good idea for the IMF to come over week before the #EURef & jump in with both feet? Carney: I think it's a detail
To MPs Carney won't rule out further interventions in Brexit debate, but says the broad issues have been set out
10.15am BST
10:15
Next question for Mr Carney....
Q: Is it acceptable for the International Monetary Fund to turn up a week before the EU referendum and give its views? [explainer: the Fund is due to publish its full health check on the UK, including in-depth calculations on the ‘Brexit’ effect, next month]
Quite frankly, I have no influence over the IMF, says Carney.
Q: But is it acceptable?
The thrust of the IMF’s views on this issues is well known, Carney argues
Q: But is it a good idea for the IMF to ‘jump in’ with both feet, at such a crucial political time?
Carney says he’s only expecting to get “detail” from the IMF about the UK economy next month....
10.11am BST
10:11
Carney defends Bank's Brexit warning
Mark Carney begins his hearing by defending the Bank of England’s warning that Britain could plunge into recession if it leaves the EU.
Asked what principles and guidelines are being used for such forecasts, the governor says the Bank has adopted “substantially the same rules as the UK civil service”.
But there’s one big difference - civil servants support a minister, while the Bank is independent and doesn’t support government policy.
And the Bank will soon go into purdah, to prevent any officials saying anything controversial in the run-up to the June 23 referendum.
However, the Bank will be setting UK interest rates on 16 June, and will release the minutes of its meeting on that day
Q: So we can’t exclude the possibility of anoher intervention in the Brexit debate, asks chairman Andrew Tyrie....
It can’t be excluded, Carney agrees. But in his judgement, the Bank has already highlighted the main issues. So he doesn’t expect to say anything new on the 16th.
There is a lot of uncertainty in the economy at the moment, so the Bank could be over-or-under-estimating the strength of the economy, Carney concludes.
10.02am BST
10:02
Bank of England governor Mark Carney is appearing before parliament’s Treasury committee to answer questions about the UK economy, and his warnings against Brexit.
Here’s a livefeed.
10.01am BST
10:01
Britain’s failure to hit its borrowing targets last year are a blow to chancellor George Osboene, as he tries to rally the country to remain in the EU.
Howard Archer of IHS Global Insight says:
The upwardly revised shortfall for 2015/16 leaves the Chancellor open to criticism that he clearly missed the 2015/16 public finances targets that were set out as recently as March’s budget – and could well be used by supporters of the UK leaving the EU as evidence that the Treasury’s forecasts are unreliable (although the public finance forecasts are actually done by the Office for Budget Responsibility).