LONDON • Mark Carney defended the publication of the Bank of England’s (BoE) Brexit scenarios, telling Parliament that the institution couldn’t hold back its analysis once lawmakers had asked for it.
The BoE last week released a report on Prime Minister Theresa May’s deal and other Brexit outcomes. Its worst case scenario for a chaotic exit sees the economy shrinking by 8% within a year, property prices plunging almost a third and the pound losing a quarter of its value to below parity with the dollar.
The BoE’s scenarios were more extreme than the government’s, and prompted criticism from some lawmakers, who accused Carney of undermining the BoE’s credibility.
Speaking in front of the Treasury Committee, Carney reiterated that the central bank’s analysis laid out scenarios, not forecasts.
The main takeaway should be that the BoE found that UK banks could withstand any outcome, he said, adding that there is a low probability of the worst-case Brexit scenario materialising.
Responding to criticism of the publication, Carney said that’s an “unfair” attack. He said the BoE doesn’t have the luxury of holding back material if the Treasury Committee demands it. The bank has been discussing the worst-case scenario in private for a couple of years.
In a column for Bloomberg Opinion yesterday, former BoE governor Mervyn King accused May’s government of “incompetence of a high order”. He also took a swipe at the bank’s analysis, saying it “saddens me to see the BoE unnecessarily drawn into this project”.