Mr Carney’s recession

Mr Carney did not blush or look embarrassed when he told us the UK could enter a recession as a result of Brexit. It was an absurd forecast, but he was  careful to use the word “could” rather than the word “would” when making it.

Could the UK go into recession in the next two years? I can see no way it could do so if we leave the EU. I could  see it doing so if there was a general world recession, or if there was a sudden and serious flare up in the Euro crisis with the collapse of the Euro area economy, but not if we decide to repatriate our EU contributions, our fish and the other matters that make our position worse by being in the EU.

The Bank should set out the positive impact of spending our own money on our own priorities. Spending the £10 bn of net contribution we do not currently get back here at home would be a 0.6% boost to our economy. It would mean more jobs and more incomes earned here in the UK, so more growth. Where was that obvious fact in Mr Carney’s thinking?

Then there would be the improvement in the balance of payments for the same reason – we would no longer have to send all that money abroad. Wouldn’t that have a favourable impact on the value of the pound?

Mr Carney decided to kitchen sink the bad news forecast. He told us we could have a  recession. We could have output down, inflation up, and pound down all at the same time. How come? If the pound fell substantially that would boost exports and therefore boost UK output. As the Bank has already told us it would cut interest rates in such a scenario and would look through any temporary imported inflation from a lower pound, he should also be forecasting the positive output effects of the lower rates and extra money creation he has told us he has  in mind.

It was an extraordinary muddled forecast. Most commentators and forecasters do not expect a world recession or a major Euro crisis or a Chinese crisis anytime soon. Without one or more of those the UK will not enter a recession. Out of the EU we will keep our trade. Out of the EU the main car makers have already told us they will carry on investing here. Out of the EU there will be a small fiscal boost to the UK’s output and balance of payments as we spend our own money on our own priorities.

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66 Comments

  1. Antisthenes
    Posted May 14, 2016 at 6:13 am | Permalink

    Strip out the speculation about what will or will not happen on Brexit and there are few certainties left. None on the remain in side but actually a number on the leavers side. Repatriation of sovereignty and the right of self determination is restored. Our contribution will be reduced considerably that is certain by how much that is not. Our coastal seas will come back under our ownership. A layer of government is removed always to be desired. No longer political and economic union is a threat. EU problems will no longer be ours. We will not have to kow tow to anyone. We can trade and cooperate with whoever we like on our terms. Control over our borders will be restored.

    Leaving comes with uncertainties that is sure but they are the same uncertainties that would be if we remain in. In fact remaining in comes with far more uncertainties as we have collective responsibility for 27 other nations. Nations whose actions tomorrow will not just impact on them but the UK as well. For example Merkel declaring open house for immigrants dragged us into a problem and cost that if we had not been a member we would not have had.

  2. Lifelogic
    Posted May 14, 2016 at 6:19 am | Permalink

    Out of the EU we will certainly be better of as we will restore democracy and have a government that can act in the UK’s interests for a change. We can have selective immigration taking the beneficial ones only, energy at about half price, no fees to pay and a bonfire or red tape. A government that can be more nimble in doing so. We will also have the bonus of getting rid of the economic illiterate, wage controlling, tax increasing, sugar tax, IHT ratting socialist buffoon of a chancellor. Hopefully we can find a sensible one who believes in lower simpler taxes and freeing businesses from endless over regulation and over taxation.

    We should start by getting rid of the absurd energy performance certificates and the 3% extra stamp duty (an absurd tax on tenants).

    Some remainer dope on LBC was even suggestion we would have to pay more for imported EU chocolate and wine due to duties! Well only if we chose to put such duties in place and even if we did, then the tax raised could reduce other taxes. These people are just half witted.

  3. Lifelogic
    Posted May 14, 2016 at 6:21 am | Permalink

    Mme. Lagarde was even dafter than Carney. Predicting nearly a 10% drop in GDP. Who would trust a socialist lawyer on anything? They clearly have totally misunderstood the way the world works.

    • Hope
      Posted May 14, 2016 at 3:55 pm | Permalink

      Perhaps her poor sums is the cause for her to (have to answer and pay for her mistakes ? ed)? Osborne cannot add up or balance books as his record shows, with John Humphries asking what do you have to do to get the sack? So they should make good company with each other, neither has a track record for achieving their targets, quite the opposite. So whether the Treasury connived to help the IMF write it s report matters not both are discredited when it comes to forecasts.

      • alan jutson
        Posted May 14, 2016 at 4:21 pm | Permalink

        Hope

        I see it is reported that the Treasury supplied all of the figures to the IMF, thus no explanation needed.

  4. Dame Rita Webb
    Posted May 14, 2016 at 6:27 am | Permalink

    “Most commentators and forecasters do not expect a world recession or a major Euro crisis or a Chinese crisis anytime soon.” Have we got our excuses in early? Just like 2006/7 the establishment view is that “no one could see that one happen”. As Keynes defined it (a continued period of sub trend growth) we are in a DEPRESSION right here, right now. Its only a matter of time for the UK for the economic order to collapse. The current state of calm is built around an ever increasing pile of public and private debt. At some point the avalanche must come down. You cannot pay your way in this world by having a huge slab of the population whose only economic function is consume goods and services with other peoples money.

  5. JoeSoap
    Posted May 14, 2016 at 6:50 am | Permalink

    The fact that so many “established” sources are opining on a doom and gloom scenario should make us highly suspicious of their motives.
    The fact that so many “established” organisations are contributing to Remain should make us suspicious of their motives.

    The predictions of Carney are paradoxical-is he intending to strengthen the Pound? In which case why has he kept interest rates at historic lows over the past 8-9 years? Why does he keep forecasting higher interest rates yet never actually takes the plunge? Is that because he fears a stronger Pound? If it is, then why does he have a problem with a weaker Pound which, as you say, would stimulate exports and allow him to enact his wish for higher rates?

  6. David Chapman
    Posted May 14, 2016 at 6:55 am | Permalink

    The Great British people making decisions for the benefit of Great Britain is the MAIN reason why I will vote to LEAVE the EU. Allowing Great Britain to give away it’s Rights to an unelected body of EU bureaucrats is INSANE.

  7. stred
    Posted May 14, 2016 at 7:08 am | Permalink

    It would be interesting to know what method the forecasts by Mr Carney and Mme Lagarde have used. The Treasury used a large increase in population, then failed to divide the growth by the larger number. GDP has been shown to increase with net immigration and growth per head is around 40% on some assessments. By assuming Brexit leads to less immigration the figures for growth can be reduced and recessions and reduced house prices predicted to scare voters. However in terms of growth per head the present population may actually be better off. Of course they will refuse to let us know how they skew the figures until after the vote.

  8. DaveM
    Posted May 14, 2016 at 7:22 am | Permalink

    With all the stupid ‘forecasts’ being spouted by the In campaign (presumably sponsored by Cameron and Osborne) there’s only one left to come; the island of Britain will sink into the sea if we Leave. And because it’s attached to the continent by the tunnel, it’ll drag the whole landmass down with it.

  9. Iain Moore
    Posted May 14, 2016 at 7:23 am | Permalink

    The Vote Leave response to the economic outbursts from Carney and Lagarde has been pretty lame, just saying its project fear doesn’t take you very far, and just saying its project fear time and time again sounds more like crying wolf . Vote leave need to attack the substance of what Carney and Lagarde are saying and that is not happening. They need someone like you Mr Redwood out there picking apart the Treasury, Bank of England , and IMF’s claims , for Gove and Boris are journalists, Raab , who I think has been quite good in the campaign is a lawyer. Lawson I never had much faith in, and Lamont has been disappointing.

  10. Hope
    Posted May 14, 2016 at 7:38 am | Permalink

    Mr Rees-Mogg sums it up when he called for him to resign. This soothsayer has not achieved any of his predictions or targets. He told us interest rates would go up when unemployment reached 7 percent. It is now 5 percent, why has he moved the goal posts? Who encouraged him,nthe independent Osborne? Osborne in a similar position, he failed everyone of his predictions and targets. Tossers missing the goal springs to mind.

    Lamont was correct Carney’s language was very political. It was all political including the timing. The pro EU statement on the day the true immigration figures were announced. No coincidence there.

  11. MPC
    Posted May 14, 2016 at 7:43 am | Permalink

    This, together with Christine Lagarde’s statement yesterday, proves that Remain is aiming ruthlessly to win at any cost.

    I note that Mme Lagarde and her colleagues will be back ‘with more detail’ 4 days before the referendum, so we have time to plan for a strong counter to all this the day after that which can be even more effective. Reading between the lines I suspect the IMF ‘detail’ to come will largely amount to a re-hash of the opinions/selective data produced by a carefully selected group of economists. I would suggest Voteleave immediately conducts its own canvas of economic opinion, adds this to its own research and prepares a good set of media communications to take place post IMF. Most people I know are impressed by the Leave campaign’s calm and measured statements/responses to the Remain hyperbole. So with that in mind I also think having the ever impressive Daniel Hannan on board at that event to counter the IMF ‘detail’ and convey his usual positive and uplifting vision with key facts, would be invaluable.

  12. agricola
    Posted May 14, 2016 at 7:53 am | Permalink

    Mark Carney ,as chairman of the BoE, is I would suggest just one part of the Remain orchestra.

    What do Mark Carney, Christine Lagarde (IMF), George Osborne, Ken Clarke, Rhona Fairhead (Chairman BBC Trust ), David Cameron, Peter Mandelson, Tony Blair, Gordon Brown, Denis Healey, and the late Edward Heath , to mention but a small selection, have in common. First they have been at pains to exaggerate the dangers of leaving the EU. Second, they have all at one time participated in the Bilderberg Group meetings. A group that was reputed to have been responsible for the promotion of the hapless Herman Van Rumpuy as Chairman of the European Council.

    To quote Denis Healey, a Bilderberg Group founder member and a person of 30 years involvement, “To say we are striving for a one world government is exaggerated , but not wholly unfair.”

    I ask, do they look upon the EU as their first effort in this direction. If yes, then it explains their often illogical enthusiasm for this increasingly failing experiment which would keep the UK a captive member. I can think of no other reason for Cameron to retain his enthusiasm after his positive Bloomberg speech that became a bucket of worms on his re-negotiation.

  13. stred
    Posted May 14, 2016 at 8:06 am | Permalink

    More unprofessional or deliberately misleading information from R4 this morning. Journalists were asked to analyse whether claims by both sides were true. The £350m/day contribution was pared back to the true figure of 9.9bn/ year giving 271m/day. Therefore the Brexiters claim was wrong according to John Simpson, conveniently forgetting that the figure of c10bn is usually quoted and the 350 figure given as gross.However it was gratifying to note that Kamal agreed with the 10bn figure and not the much lower figure given on the BBC facts website and HMG.

    Then the figure for extra population of joining countries that according to Michael Gove would have the right to come to the UK. The female journalist then said that of course they would not all come here, which is true and therefore he was wrong on this point. Ignoring that he never said they would all come here and neither has UKIP or anyone else. It almost sounded as though they really believed their words, or have the producers told them what to conclude- surely the can’t be that thick?

    • Tad Davison
      Posted May 14, 2016 at 9:10 am | Permalink

      Well most will already know how I feel about ‘the most trusted broadcaster’. John Whittingdale might have missed a trick in not getting this lop-sided organisation sorted once and for all. The trouble with a lie, is that it eventually becomes an accepted fact if repeated often enough.

      Tad

      • House
        Posted May 14, 2016 at 3:45 pm | Permalink

        They also forget that we are compelled to pay the contribution and it is at the discretion of the EU if we get a rebate or any other money back. They also forget the extra sums Cameron falsely says he will not pay then does so with an increase! The same written in the budget for this year, when did the BBC or media make it clear the £10 billion is the minimum we will pay to a foreign body who decides how to spend our taxes. We had a civil war to prevent the unelected king from raising taxes and imposes laws. The EU is far worse.

    • Dennis
      Posted May 14, 2016 at 10:55 am | Permalink

      I agree that this morning’s Today programme on the EU question was extremely badly done. The discussion was supposed to be discussing ‘Facts’ but only obscured.
      John Humphrys said that the EU money for science and research in the UK is not included in the rebate , implying that it is extra from the EU and is not UK taxpayers money – this is the first time I have heard that – it it true?

      In this week’s Question Time, David Dimbleby said that Christine Lagarde said that the UK economy WILL do this and this and that and was not questioned by anyone on the panel. Surely she said as every other pro EU person that these things MIGHT or COULD happen. The words ‘risk’, ‘danger’, ‘possibility’ are being used for ‘truth’ so they are certain. This is worthy of ‘Pravda’ the meaning of which is Truth.

      • Denis Cooper
        Posted May 14, 2016 at 5:35 pm | Permalink

        No, as usual it’s our money being recycled, but some of it is paid to private bodies and therefore that part is not included in the money returned to public bodies in the calculation of the net contribution as £10 billion.

  14. David Murfin
    Posted May 14, 2016 at 8:06 am | Permalink

    It wasn’t a forecast. It was an Awful Warning.

  15. alan jutson
    Posted May 14, 2016 at 8:15 am | Permalink

    John you must be so very disappointed that your present Party leader and his so called loyal side kicks are producing such wild forecasts about our position both in and out of the EU.

    Given the lies are now getting larger and larger, and to such a degree as to become almost laughable if it was not so serious, do they really think they will have a future in politics in the UK after all this is over.

    No-one will ever believe a word they say in the future.

    If It would be such a disaster if we left the EU, then why even give the people the opportunity to vote to leave and put the Country at risk.

    Fact is Cameron promised a referendum to try to ensure he retained power at the last election, without realising that the anti EU feeling was so strong.
    The man is desperate, and desperate men are dangerous people hence the lies.

    Cameron has already said he will retire as leader before the next election (I hope immediately if we vote out) some of his so called supporters/hangers on will also be collateral damage as well.

    If we unfortunately vote to remain, I wonder what will happen if the EU refuse to ratify its so called promises, and our so called special status.

    Would all of the remainers immediately resign ?

    Perhaps that is a question to ask them, so it is on record.

    • Tad Davison
      Posted May 14, 2016 at 9:19 am | Permalink

      I totally agree Alan.

      I even wrote to one MP a few days ago who is on the ‘out’ side and suggested to him that he might consider standing for the leadership of the Conservative party after Cameron gets booted out. The man has lost all credibility, and from the feedback I get from a number of local party chairmen, he’s doing the Conservative party a massive amount of damage at the grassroots. In a lot of cases, they can’t even get enough people to deliver leaflets at election time.

      Little wonder UKIP fill the territory the Tories should have occupied all along. And listening to the speech given by another failed Tory Prime Minister last night, Cameron has learned nothing because the pro-EU mistakes of the past are going to be repeated all over again.

      Tad

    • miami.mode
      Posted May 14, 2016 at 10:25 am | Permalink

      aj……Fact is Cameron promised a referendum to try to ensure he retained power at the last election, without realising that the anti EU feeling was so strong…….

      This is a point that isn’t generally touched upon, but it could well be that the promise of a referendum actually swung the election the Conservative’s way.

    • A different Simon
      Posted May 14, 2016 at 11:12 am | Permalink

      Cameron and Osborne do not have any convictions .

      Therefore they do not really believe anything they say .

      This is not quite the same thing as lying – deliberately saying something you know to be untrue .

      Amazingly , Cameron , if he was not going to join Tony Blair’s ex-leaders team , would still have a future .

      After the hypocrisy has finally been shown for what it always was , tribal Conservative voters still believe that their party is Eurosceptic and champions the family !

      The only optimism I have is that if the British people have the courage to Brexit , they also have the courage to sweep away LibLabCon .

  16. Denis Cooper
    Posted May 14, 2016 at 8:26 am | Permalink

    To be fair to Carney the media grossly distorted his careful statement.

    Nonetheless writing in the Telegraph today:

    http://www.telegraph.co.uk/news/2016/05/13/of-course-mark-carney-backs-remain–the-eu-will-always-benefit-p/

    Charles Moore asks:

    “Do you remember the independence of the Bank of England?”

    and continues:

    “As a result of the EU referendum campaign, this independence is ending. The present Governor, Mark Carney, appointed by George Osborne, has ensured that his institution has, in effect, said “Vote Remain” roughly twice a week for the last two months. This week, Mr Osborne and he said almost exactly the same thing on consecutive days. They exchanged letters about how poor Britain will be if it votes Leave.”

    My objection to this claim would be that if the “independence” of the Bank was ever real then it ended long before recent months, in fact more than seven years ago in the spring of 2009 when Mervyn King agreed to go along with the false narrative of impending deflation to justify the Bank printing vast sums of new money and using it to rig the gilts market so that the Treasury would not run out of money to pay the government’s bills.

    Letters were exchanged then, as well, letters between King and Darling designed to mislead the media and the public into believing that it was the former who was taking the initiative by proposing this course of action, and that its purpose was to avert impending deflation in accordance with the Bank’s primary statutory duty to meet the inflation target set by the Chancellor, while the latter was approving the proposal while laying down conditions.

    As I pointed out then and later the Bank of England Act 1998 has a provision, Section 19, through which the Chancellor can ask Parliament to agree to the suspension of the Bank’s normal “independence”, so he can then legally give the Bank directions on the conduct of monetary policy, but neither Darling nor Osborne ever invoked it.

    • Tad Davison
      Posted May 14, 2016 at 9:55 am | Permalink

      Denis,

      That is undoubtedly true, and then they wonder why so many people have such little faith and trust in our institutions when they are open to such manipulation. Is this not a form of corruption of the kind our fantastically honest Prime Minister wishes to clamp down on?

      Tad

    • eeyore
      Posted May 14, 2016 at 10:06 am | Permalink

      The attempt to stun us into submission by weight of authority appears to be failing. The polls remain balanced (though the betting is oddly skewed toward Remain). Does this mean, as Charles Moore deduces, that the referendum is turning into a contest of the elite against the people? Given the sullen bloody-mindedness of the English, one would rather hope so.

      The next step for the Remain campaign, presumably, will be to unleash the ad hominem arguments and claim that only the senile, the stupid, the perverse and the deranged will vote Leave. So expect to hear much common abuse in the next six weeks. Sir John Major made good use of it last night. In his mind, it seems, merely to mention UKIP is to consign to perdition.

      By the way, if Mr Cameron thinks Mr Farage will be a pushover in debate, as we are led to believe, a disagreeable surprise awaits him.

      • matthu
        Posted May 14, 2016 at 3:41 pm | Permalink

        The questions will have been planted, and neither Farage nor Cameron will be able to challenge the other on anything they say.

        It won’t be a “debate”.

    • Mitchel
      Posted May 14, 2016 at 12:29 pm | Permalink

      Wonderful,inspirational article from Charles Moore,there.

  17. oldtimer
    Posted May 14, 2016 at 8:27 am | Permalink

    Mr Carney’s remarks matter because people are more inclined to believe him than politicians. That does not, of course, make him right but it does add weight. It is one of a barrage of forecasts and dire warnings that come daily from various state and supranational bureaucracies. Apparently M Lagarde of the IMF has forecast a drop of no less than 10% of GDP as a result of Brexit; an incredulous Andrew Neill pointed out this would be bigger than the last financial crash in 2008, bigger than the Great Depression that followed the Wall Street crash and bigger than the fall that occurred during WW1. He did not sound convinced.

    All these statements are qualified by the word “could”, that ultimate get out word if ever their authors are ever called to account. It also plays to the the use of “the precautionary principle” that has conveniently, and intentionally, found its way into EU treaty language and UN declarations and statements. This convenient phrase affectively hands control to so-called “experts” who are thereby enabled to make dire predictions that “could” occur. This in turn enables their political masters to make the decision or argue the case they want to prevail. This is what we are hearing and witnessing daily as Project Fear is rolled out to ever more ominous predictions of what “could” happen if the UK was so foolish as to vote Leave and take a “leap in the dark”.

    The reality is that the guesses made by the “experts” are no better or worse than you, I or anyone else might make about the consequences of Brexit once the dust settled. The real “leap in the dark” would be a decision to Remain. Mr Cameron has conspicuously and intentionally failed to spell out the real implications for the UK as the next stages of EU unification take place according to the road map set out in the Five Presidents’ Report. I hope and trust that the Leave campaign challenges and holds holds the Prime Minister to account on this. Otherwise we will get a rerun of the last referendum when the public was assured it was all about trade when, in reality, as Cabinet papers of the time have revealed it was clear to ministers and senior officials that it was all about monetary and political union. The British public was conned once. The Leave campaign needs to ensure it is not conned a second time.

    • Denis Cooper
      Posted May 14, 2016 at 10:22 am | Permalink

      Well, Churchill proposed the slogan “You can always take one with you” in the event of a German invasion, and according to these assembled scaremongers we could take the whole world with us into economic and therefore political oblivion.

      But only if their leaders let that happen, through stupidity and spite; and really what it boils down to is that Cameron and Osborne and their miscellaneous allies believe we are stupid enough to believe that world leaders are stupid enough do that.

      As Ambrose Evans-Pritchard has written today: “the dire outcomes presented successively by the US President Barack Obama, the Treasury, the OECD, the Bank of England, and the IMF, would occur only if the world’s leading countries actively chose to cause the very havoc that they so decry”.

    • Dunedin
      Posted May 14, 2016 at 5:04 pm | Permalink

      Mr Carney also qualified his prediction as being a “technical recession” – two consecutive quarters of negative growth. Not quite the apocalypse reported by the media.

  18. Paul Cohen
    Posted May 14, 2016 at 8:36 am | Permalink

    Mr Carney well knows the situation, and by following orders of Head Office his credibility is shot.

    Perhaps there ought be much more emphasis on the risk of staying in the EU – the burocratic nightmare, waste, fraud, EU armies and the lack of influence we have, etc, etc. Still waiting to hear of the reforms we are supposed to have negotiated and achieved.

  19. majorfrustration
    Posted May 14, 2016 at 9:18 am | Permalink

    JR unless all elements of the Leavers Groups get their acts together people will start believe the rubbish printed in the MSM and on the BBC. Its time for a “rebuttal” unit to examine and question comments like those of BoE and IMF.

    Reply We do act together and there is speedy rebuttal provided by Vote Leave.

  20. majorfrustration
    Posted May 14, 2016 at 9:23 am | Permalink

    If you look behind the IMF comments the amount that that organisation has invested in Europe directly or indirectly must give them sleepless nights in the event of the UK leaving the EU.

    • Denis Cooper
      Posted May 14, 2016 at 5:29 pm | Permalink

      Only if they really believe their own doomladen prognostications, which to a rough approximation is the same as believing that the Germans are stupid.

      I saw this today:

      http://uk.reuters.com/article/uk-britain-eu-germany-economy-idUKKCN0Y31PN

      and it says “In our crisis scenario we’re even expecting a slight recession in Germany around the turn of the year”, a prediction which has a similar level of certainty to that made by Carney yesterday in response to a question.

  21. Denis Cooper
    Posted May 14, 2016 at 9:51 am | Permalink

    Ambrose Evans-Pritchard has an article today in which he excoriates the IMF – while saying that he does not wish to denigrate it! – and highlights some interesting points:

    http://www.telegraph.co.uk/business/2016/05/13/imf-meddling-on-brexit-is-scandalous-skulduggery/

    Firstly, he warns that the IMF has a poor record on the prediction front, having failed to foresee the global financial crisis and having badly misjudged the Greek situation.

    So there is no reason to trust IMF predictions now; and that would be the case even if it was not headed by a friend of Osborne who showed herself to be of questionable integrity when she cheerfully admitted to the Wall Street Journal on December 17th 2010:

    “We violated all the rules because we wanted to close ranks and really rescue the euro zone.”

    “The Greek and Irish rescues – €110 billion and €67.5 billion, respectively – and the creation of the bailout fund were, Ms. Lagarde said, “major transgressions” of the Lisbon Treaty that is the European Union’s governing document. “The Treaty of Lisbon,” she says, “was very straightforward. No bailing out.””

    Secondly he correctly points out that “the dire outcomes presented successively by the US President Barack Obama, the Treasury, the OECD, the Bank of England, and the IMF, would occur only if the world’s leading countries actively chose to cause the very havoc that they so decry”; and if they did that we would assuredly take them down with us.

    (There’s an amusing video clip here:

    http://order-order.com/2016/05/13/peak-projectfear/

    in which Andrew Neil asks whether the consequences of Brexit really would be worse than the Great Crash of 2008, or the Great Depression, or the First World War.)

    And thirdly he dismisses as a “canard” the IMF claim that if the UK left the EU then its trade arrangements with 60 non-EU countries would lapse automatically, and so would have to be renegotiated, because:

    “These deals could be switched easily enough under the principle of “presumption of continuity” enshrined in international law. All they need do is to sign a document of continuation in force, an administrative procedure.”

    That is, of course, provided all parties agree to that.

  22. Bert Young
    Posted May 14, 2016 at 9:54 am | Permalink

    The remarks by Carney and Lagarde were timed and orchestrated by Osborne ; there can be no other conclusion . Osborne still sees himself as a contender for Cameron’s job with his principal opponent – Boris ; he like Cameron will pull out all the stops to rubbish his opposition . There was little substance in the views expressed by Carney and Lagarde whose predictions in the past have been wrong on so many occasions ; Lagarde is a fervent supporter of the EU and she knows full well that Brexit is likely to bring about its downfall . She has encouraged the economic expansion of the EU at a time when its underlying financing was – and still is , in a terrible condition ; the dilemma in Greece is as much of her making as it is with Brussels .

    I don’t believe for a moment that the “undecided” will have been influenced by these “economic” predictors ; polls show that migration is the biggest factor that will count in the way they will vote . Economics and it vagaries will always be discarded when it comes to the judgement of the ordinary voter ; the campaigners would be wise to bear this in mind . As for me , sovereignty is top of my list .

  23. CHRISTOPHER HOUSTON
    Posted May 14, 2016 at 9:57 am | Permalink

    I thought the duty of the BoE and any Governor is to report directly to the UK Government.
    Was the Government watching TV? Did it catch what Mr Carney was talking about?

    Are all our bank managers about to go public on our accounts?…:-

    “..If Mr Smith decides to alter his contract with his present supplier it could lead to a significant fall in his ability to conduct his business”..

    Of course such a public announcement even if correct would not be made. It would undermine the business of Mr Smith… create such uncertainty that his business would fail.

    So what has been the market reaction to Mr Carney’s public outburst? Are there legal measures which can be taken if it can be proven there has been any “loss of confidence” or “growth of uncertainty”. That is, Damages to UK Plc?

    I take it the Governor of the BoE was not acting in a personal or private capacity: merely voicing his personal opinion when asked for it when stepping out of his car?

    But no-one in the business world genuinely listens to the BoE any more. TheBoE always get it wrong. In fact, the stock market has not reacted one jot to Mr Carney. International business news outlets have not placed any especial emphasis on his words than that from a rock star saying he’s in love, again.

  24. CHRISTOPHER HOUSTON
    Posted May 14, 2016 at 10:19 am | Permalink

    In the days of Ex-PMs Macmillan, Douglas-Home, Wilson, Heath, Callaghan, Thatcher and Major, even one singular detrimental remark by just one august bodies such as BoE, IMF, CBI Could but probably Would have sent the UK economy into a severe downturn.
    Yet all the comments of all these bodies coupled with statements of agreement from Messrs Cameron, Osborne, Ex-PMs and Chancellors have had the unbelievable and unprecedented result of ZERO

    The International Financial Community has not reacted to all these people and bodies.

    I should think many of these individuals are quite literally crying.Humiliated professionally and personally as never before in their entire careers..

  25. ian wragg
    Posted May 14, 2016 at 10:29 am | Permalink

    Good article in todays Telegraph. the Establishment against the people.
    Today I took my bike for its MOT.
    The garage populated by 30 – 40 year old plus a 17 year old apprentice were all wearing GO leave the EU badges.
    My very un scientific straw poll, dog walking and helping in wifes shop reveals 41 Leave, 3 Remain.
    We live not far from the Polish enclave of Shirebrook and this may have an influence.

  26. Mike Stallard
    Posted May 14, 2016 at 10:43 am | Permalink

    Two sorts of people support the EU.
    The first sort know nothing about it. They have never heard of M. Juncker’s views, the Spinelli document or Guy Verhofstadt.
    The second sort are on the EU payroll. Or they are on the government team.

  27. Dennis
    Posted May 14, 2016 at 11:15 am | Permalink

    Why is it that when ever predictions of disaster for the UK are made, no presenter/interviewer asks why or how these could happen, these predictions are just left without comment or analysis. The BBC is always guilty of this.

  28. miami.mode
    Posted May 14, 2016 at 11:19 am | Permalink

    ……Out of the EU the main car makers have already told us they will carry on investing here…..

    Plainly they haven’t told transport secretary Patrick McLoughlin as it was reported in yesterday’s online Guardian that in a speech to the Cambridge University Conservative Association he said that both the car and farming industries could disappear from Britain due to the financial shock of Brexit.

    This must rank second or third after David Cameron’s warning of European war and genocide and Christine Lagarde’s dire predictions.

    Interviewing any of these three would doubtless be similar to that with a well known pop singer some years ago when the interviewer supposedly brought it to a conclusion by saying “You really will have to excuse me, as I have got an appointment back on Earth”.

  29. Qubus
    Posted May 14, 2016 at 11:38 am | Permalink

    First-class comment JR. The sooner Mr Carney goes back to Canada the better.

  30. Denis Cooper
    Posted May 14, 2016 at 11:51 am | Permalink

    Peter Oborne in the Daily Mail today:

    http://www.dailymail.co.uk/debate/article-3590045/PETER-OBORNE-man-shamefully-rigging-referendum.html

    “For example, Antony Phillipson, a very capable but fanatically pro-EU official who used to work as private secretary to Mandelson, is running the European unit at the Cabinet Office. I am told that Mr Phillipson retains his links with Mandelson and acts as a bridge between Tory and Labour wings of the pro-EU campaign.”

    They are all chums together, the political elite, and they are all enemies of the people.

  31. Brian Tomkinson
    Posted May 14, 2016 at 12:55 pm | Permalink

    When asked for details to support his forecasts by a TV journalist Carney
    replied that they would be available for all to see in 8 years time! We seem more like a third world dictatorship under Cameron. He hosted an anti-corruption summit this week when it was revealed that his government had massively underreported the true level of inward migration and his party i s being investigated for allegedly exceeding the legal limits on election expenses in numerous constituencies. I don’t know how can you bear to have him as your party leader?

  32. Johnny Norfolk
    Posted May 14, 2016 at 1:14 pm | Permalink

    Carney should have been asked if he would guarantee we would not have a recession if god forbid we stayed in. His answer would have been interesting. But our bought and paid for media would never ask it or it would never be shown.

  33. Denis Cooper
    Posted May 14, 2016 at 1:22 pm | Permalink

    Great.

    Not only do we have resident Irish citizens being allowed to vote in our referendum, even though resident UK citizens are not allowed to vote in any Irish referendum, now we also have the Irish Prime Minister coming over to campaign to keep us in the EU:

    http://www.theguardian.com/politics/2016/may/13/irish-leader-enda-kenny-campaign-uk-remain-vote-eu-referendum

    This was supposed to be the chance for the British people to have their say after more than four decades of their views being suppressed, so what does the government do?

    Allow foreigners to vote, and invite a stream of foreigners to come and lecture us on why we should vote the way that they want.

  34. Atlas
    Posted May 14, 2016 at 1:43 pm | Permalink

    … all “masterminded” by the Chancellor no doubt…

  35. acorn
    Posted May 14, 2016 at 3:44 pm | Permalink

    Before the current version of the FED was created, the US went for seventy five years without such, that’s how little you need a central bank (CB). CBs are a relic of the Gold Standard and old fashioned monetary (interest rate) policy.

    Under a fiat currency system, where the government’s Treasury spends by simply crediting bank accounts; it’s currency area only needs a central clearing and settlement system for domestic commercial banks (reserve accounts) and foreign currency areas. BTW: The Treasury never runs out of its own money and does not have to borrow it from anyone. It can go on crediting bank accounts, till the end of time. Issuing Gilts is basically a system for giving free money (interest), to pension and insurance companies.

    The FIAT currency issuing Treasury and it’s CB, are one and the same. There is no such thing as an independent CB in a fiat currency system. The CB should return to being a department of the Treasury. It was the threat, by the commercial banks, to shut down the clearing system, that forced the Treasury to bail them out, in 2008.

    • Denis Cooper
      Posted May 14, 2016 at 5:07 pm | Permalink

      In theory the Treasury could never run out of its own money if it was issuing its own money, but under our present system it isn’t issuing the money which is in everyday circulation as legal tender. The Bradbury pound was money issued by the Treasury during the First World War, and it said as much on the notes, but if you take a (UK) banknote out of your wallet you will see that it says “Bank of England”. The primary point of QE was to overcome the technical obstacle that the Treasury could not print more money to pay the government’s bills, it had to get the Bank to do that.

      • acorn
        Posted May 14, 2016 at 6:15 pm | Permalink

        Do some research on what constitutes “base money” (MB), that is, notes, coins and reserves. The Treasury sub-contracts coin manufacture to the Royal Mint and notes to the BoE. Neither can issue them, new, into general circulation unless the Treasury alone “spends” them into circulation.

        That is, the BoE can’t increase the net fiscal assets in the economy, only the Treasury can do that.

        QE swaps Gilts and Treasuries back into the “reserves” that bought them originally. The Treasury “spends” (out of thin air) by creating deposits in bank accounts. As all banks, including the BoE, operate by law, with a balance sheet, the Treasury, has to create an asset, a “reserve”, at the BoE , to balance out the liability it has given the bank, by paying my state pension into my current account, for instance.

        • petermartin2001
          Posted May 15, 2016 at 4:04 am | Permalink

          @Acorn. You are totally correct as always!

          I might just add that pounds have always, or at least since links to any gold convertibility were removed, been created out of thin air. Or through ‘open market operations’ conducted by the BoE in collaboration with the Treasury, to put it in slightly more technical terms. That’s where money comes from in the first instance!

          Yes, its all just printed or created in a computer. No, it doesn’t necessarily lead to hyperinflation.

          Arguing otherwise about the creation of money is just nonsense. Its like arguing that babies are created in Heaven and delivered by the stork!

        • Denis Cooper
          Posted May 15, 2016 at 6:54 am | Permalink

          The simple fact remains that when we pay for our groceries we are using money issued by the Bank of England, not the Treasury.

          If you look at Bradbury pounds, for example here:

          https://www.google.co.uk/search?q=bradbury+pounds&biw=1777&bih=861&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjn_JSVv9vMAhVmAsAKHahdCG4Q_AUIBygC&dpr=0.9#imgrc=suqxYl04JSF6kM%3A

          they were issued by the Treasury, not the Bank.

          • acorn
            Posted May 15, 2016 at 7:21 am | Permalink

            acorn
            Posted June 21, 2014 at 4:31 pm | Permalink

            Bradbury Pounds were Gold Warrants. It was too difficult to obtain and ship physical Gold in WW1, so you got an IOU from the Treasury you would get some Gold when the war was over.

            “The Government is issuing Stirling £1 and 10s notes. Also making Postal Orders legal tender. A supply of Government Notes will be forwarded to you [Banks] as soon as possible . These must be issued in preference to gold and so far as Notes are available, gold must not be issued. We have been officially informed that an ample supply of this new currency will be in circulation without delay.”

            Foreigners preferred the BoE notes to Treasury notes, but both were similarly convertible to Gold; theoretically. A few years later the BoE took over the issue of all notes, tried to resurrect a Gold Bullion Standard which Mr Keynes said would not work, and it didn’t. Central bank collapse followed and WW2. Oh, and FIAT currency that isn’t convertible to anything other than more fiat currency.

          • petermartin2001
            Posted May 15, 2016 at 11:07 am | Permalink

            I don’t think we’ll see Bradbury pounds again which were issued, as you say, directly by the Treasury rather than the then privately owned BoE as a WW1 emergency measure. Now that the BoE is Nationalised we can consider all modern day pounds to be the equivalent in any case. They are just Government issued IOUs in exactly the same way.

            As well as the Bradbury Pounds the government of the day encouraged the use of Postal orders as a currency which were in effect also a government issued IOU.

            Even if you reject the Government issued IOU argument, we could, if the law allowed, have any commercial bank issuing the currency in exactly the same way. They’d be Barclay’s IOUs say, but just as good providing that these were underwritten by Government in the event of a bank failure. The commercial bank would hold government bonds to balance its books just as the BoE does now.

            If you think in Double Entry Bookkeeping terms it really makes very little, if any, difference to the general principle.

          • Denis Cooper
            Posted May 16, 2016 at 7:11 am | Permalink

            None of which in either response in any way affects the simple fact that when we pay for our groceries we use money issued by the Bank of England, not the Treasury.

            In the spring of 2009 the Labour government could have asked Parliament to pass legislation so that the Treasury could start to issue its own money to pay the government’s bills; but it didn’t do that because it was much easier and simpler, and far less likely to alarm the population, to get the Bank to issue more of the normal, familiar money, and arrange for it to be passed to the Treasury through the gilts market. That is why the Bank (or more exactly a wholly owned subsidiary of the Bank) now owns gilts issued by the Treasury and valued at £375 billion, while the Treasury got (almost all of) that £375 billion and spent it paying the government’s bills.

          • petermartin2001
            Posted May 17, 2016 at 4:24 am | Permalink

            Denis,

            You might like to look at it another way and ask yourself why notes denominated in pounds and issued by the BoE are worth anything at all. There’s no link to gold any longer. They are just pieces of paper or digits on a computer.

            The only possible answer is that the Government will accept them as payments of tax obligations. That creates a demand for them which would not exist otherwise. It really makes no difference if they are issued by the Govt owned BoE or the Treasury.

          • Denis Cooper
            Posted May 17, 2016 at 11:42 am | Permalink

            It makes a big difference if the Treasury needs more money, our familiar national currency, to fund the government’s budget deficit, and doubts that it will find enough people willing to lend it that money in sufficient quantities at feasible interest rates, and so would like some more to be conjured out of thin air for its use paying the government’s bills.

            Then it has to arrange for the Bank to create that new money and swap it for gilts. The Treasury can produce gilts ad infinitum, but unfortunately they are not usually accepted as payment at supermarket checkouts when we are buying our groceries, the lady expects money issued by the Bank.

            I point out again that the EU treaties constrain what the UK authorities can do, insofar as under Article 123 TFEU the Bank cannot buy gilts direct from the Treasury, or simply extend an overdraft or loan to the Treasury:

            “Overdraft facilities or any other type of credit facility with the European Central Bank or with the central banks of the Member States (hereinafter referred to as “national central banks”) in favour of Union institutions, bodies, offices or agencies, central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of Member States shall be prohibited, as shall the purchase directly from them by the European Central Bank or national central banks of debt instruments.”

  36. The Prangwizard
    Posted May 14, 2016 at 4:12 pm | Permalink

    In case there are some who have not yet seen Bexit The Movie, please view it and persuade your ‘remain’ friends to watch it too.

  37. formula57
    Posted May 14, 2016 at 5:04 pm | Permalink

    The great benefit to the UK economy from supplying both sides with materiel in the forthcoming (pending Brexit) war between Germany and France that the Prime Minister has promised us has not been factored in by anyone, least of all Mr Carney and Madam Lagardge. A bad oversight by supposed forecasters!

  38. petermartin2001
    Posted May 15, 2016 at 3:46 am | Permalink

    Most commentators and forecasters do not expect a world recession or a major Euro crisis or a Chinese crisis anytime soon.

    Most commentators and forecasters don’t have a good track record. Hardly any of them predicted the 2008 GFC for example.

    Without one or more of those the UK will not enter a recession.

    As the UK has sensibly kept the pound the UK government, like other sovereign currency issuing Govts like the USA, Canada, Australia etc has all the fiscal and monetary policy space needed to avoid, if used wisely, a serious UK recession even if there is a Chinese and EU recession which there probably will be.

    On the other hand, if the UK government, as with any of the other governments mentioned, is unwise, and starts fretting too much about its budget deficit, we could have a local recession even if the rest of the world is doing comparatively well.

  39. foto2021
    Posted May 15, 2016 at 11:55 am | Permalink

    Perhaps Mr Carney’s intemperate outburst – for that is what it was – was the inevitable result of his having worked at Goldman Sachs for 13 years.

  40. James Winfield
    Posted May 16, 2016 at 12:34 pm | Permalink

    If there is a recession caused by Brexit, many previous Tory voters, including myself, will be unlikely to vote Tory. Don’t leave us with Corbyn by stealth.

  41. Lindsay McDougall
    Posted May 19, 2016 at 2:05 am | Permalink

    Mr Carney said that he and his monetary committee had carries out analysis supporting his claim about Brexit and had also analysed some of the risks of staying in. However, as Remain was the staus quo and he was a government advisor, he was not allowed to publish it for eight years. Just in time for the next referendum but three!!!

    We all know what analyise is – data, axioms, logic, results, conclusions. Mr Carney won’t publish his analysis and Mr Osborne’s analysis is demonstrably biased. No one else on the Remain side, or their famous blood curdling cheer leaders, has produced evidence in support of their assertions. For example, Christine Lagarde has opined that something bad, perhaps ‘very, very bad’ will happen to the UK after Brexit, without giving any proof. I warm to the story of Hansel and Gretel more with every passing day.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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