To hear his critics tell it, Mark Carney, the Governor of the Bank of England and former governor of the Bank of Canada, promised economic armageddon if Britain voted for Brexit. But Brexit was voted for and yet chaos failed to sweep the land; ergo, Mr. Carney was a liar, and a shill for the “Remain” camp. Rubbish.
Very properly, Mr. Carney never told the citizens of the U.K. how to vote in the Brexit referendum last June. Instead, he stated the blindingly obvious: that a departure from the European Union could seriously disrupt Britain’s commercial and investment relations with its main trading partners. In parliamentary committees before the referendum, he explained the probable damage to the British economy.
When a modest majority nevertheless voted for Brexit, Mr. Carney and his colleagues lowered interest rates, the better to maintain confidence and cushion against any economic shocks. And in the short term, even though nothing has yet changed about the U.K.’s position in the EU, there were shocks.
British manufacturing output fell precipitously in July, just after the referendum, and commercial property values in Britain fell by 2.8 per cent, the largest drop since 2009. In August, there was some recovery, and the Bank of England’s forecast is now a bit stronger than it predicted before the Brexit vote.
That should be welcomed. Mr. Carney and his colleagues’ stimulus may have helped prevent a panic; prudence is pretty much the definition of a central banker’s job. He proclaims himself to be “absolutely serene” about the bank’s decisions. That didn’t mean no stimulus was needed, nor does it mean that Brexit – something that has yet to happen – will be easy or free.
Meanwhile, Prime Minister Theresa May’s government has yet to make any actual moves toward Brexit. Faced with a growing awareness of the enormity of the task of negotiating a separation from the EU, she has wisely shown herself to be in no hurry to get started. That’s because leaving the EU will have a negative impact on Britain’s economy, including industries such as finance which are closely tied to the continent. Mr. Carney’s worst fears have yet to come to pass because Brexit has yet to happen. And hopefully never will.Report Typo/Error
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