Bank of England governor says EU has helped UK economy – BBC News

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Mark CarneyImage copyright

The governor of the Bank of England has said that Britain’s membership of the EU has re-inforced the “dynamism of the UK economy”.

In a pre-hearing letter to the Treasury Committee, Mark Carney said that the relationship had helped the UK to grow.

In a sometimes fractious exchange with MPs on the committee, Mr Carney denied claims he was “pro-EU”.

Conservative MP Jacob Rees-Mogg accused him of making “pro-EU” comments “beneath the dignity of the Bank”.

The referendum on whether Britain should remain in the European Union is to be held on Thursday 23 June.

Mr Carney emphasised that the Bank was not taking sides in the EU referendum.

“We will not be making, and nothing we say should be interpreted as making, any recommendation with respect to that decision,” he said.

Mr Carney appeared in front of the cross-party Treasury Committee to discuss the economic and financial costs and benefits of the UK’s EU membership.

Referring to a Bank of England report on the EU, Mr Carney concluded that EU membership had “likely increased the dynamism of the UK economy and correspondingly its ability to grow without generating risks to the Bank’s primary objectives of monetary and financial stability”.

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Jacob Rees-Mogg was highly critical of the Bank of England’s findings

However, Mr Rees-Mogg said this could be attributed to reforms made under Margaret Thatcher.

“It is speculative and beneath the dignity of the Bank of England to be making speculative, pro-EU comments,” Mr Rees-Mogg said.

The MP said that he was concerned that the Bank was focused more on the positive aspects of EU membership than the negative, adding that it was guilty of “political partisanship” over Europe.

Mr Carney rejected Mr Rees-Mogg’s statements as “wholly unfounded” and said: “With respect, what concerns me is your selective memory.”

The governor said that he had not discussed what he was going to say on Tuesday with David Cameron. “I have not had conversations with the Prime Minister about what I might say about the European Union.”

Exit after-effects

Mr Carney said an exit was the biggest domestic risk to financial stability.

If Britain votes to leave the EU, Mr Carney said the Bank “will do everything in our power to discharge our responsibility to achieve monetary stability and financial stability”.

He said that there were measures that the Bank of England could take in the short term to support the financial system but said he could not rule out the possibility that there could be issues with stability.

Commenting on the short-term impact of an EU exit, Mr Carney said: “There could be lower levels of activity because of the degree of uncertainty that could affect investment and household spending. Reasonable expectations during a period of uncertainty.

However, he said it would not be possible to say what the longer term impact of leaving the EU would be on Britain. “We are not forming a view because it’s outside our remit,” Mr Carney said.

Mr Carney was also questioned about the financial sector’s reaction to an exit.

He said: “One would expect some activity to move, certainly there’s a logic to that and there are views that have been expressed publicly and privately by a number of institutions that they would look at it, and I’d say a number of institutions are contingency planning for that possibility.”

On Monday, the Bank of England pledged to offer extra funding to the financial market before and after the June vote, in case uncertainty put pressure on the banking system.

Bank of England governor says EU has helped UK economy – BBC News