Is Brexit Threatened by Bank of England Governor?
As mad as the title sounds, today, Jacob Rees-Mogg, Conservative aristocrat and Brexit defender, said that the governor of the Bank of England (BoE), Mark Carney, is an “enemy of Brexit,” and that too many people are negative towards Brexit.
Rees-Mogg explained his antipathy towards Carney by using an example from his privileged experience to say that, “He had a panic interest rate cut that was completely unnecessary and helped push the pound down further than it would otherwise have gone.” Carney is then an enemy of Brexit for manipulating the rates and spreading panic to wealthy Brexiteers. If only Carney had such a power or intention.
He argued that the decision to leave the EU didn’t have a negative effect on the economy and that the fall of the pound has instead helped the economy. The fall in GDP, he explained, was because of 2016’s strong growth. However, he recognised that it was reasonable, regardless of Brexit, to experience a slow-down in growth.
His comments come after the release of the UK GDP data which showed that the UK economy grew the last three months. This is important since the BoE is preparing to hike interest rates for the first time in a decade and today’s news might affect the decision on 2 November. After the figures were out, the pound rose against both the US Dollar and the Euro by almost 0.3%, with many City currency traders anticipating a rate rise.
Mark Carney is obviously under a lot of pressure to keep the economy going, especially under the current circumstances which are exceptional and unpredictable. Whether the Monetary Policy Committee (MPC) votes for a rate hike or not, the Brexiteers are always going to argue that the elites, whether that means the political or financial leaders and officials, are scheming and ready to sabotage Brexit.
Carney was attacked by Brexiteers last year during the referendum campaign when he rationally argued and warned about the obvious dangers of Brexit to the economy, the possible recession and financial instability.
Talking to the BBC5 Live’s Emma Barnett, Rees-Mogg said: “Mark Carney has opposed Brexit the whole way through, and is an enemy of Brexit. There is no doubt about that. His statements have consistently been hostile to Brexit.” The MP for North East Somerset also accused the BBC for perpetuating the Brexit negativity and questioned whether the “BB” in the “BBC” stood for “Brexit Bashing” instead of “British Broadcasting.”
Rees-Mogg, a rather old-fashioned gentleman, steeped in archaic rhetoric and Victorian conservativism, said that there was no reason to worry about tomorrow, or, for that matter, a no-deal Brexit outcome. This comes from a man who might appear trapped in the past, but who is “a titan of high finance,” and the inheritor of millions, including various properties and a Grade II-listed manor house in Somerset. The Honourable Jacob Rees-Mogg has nothing to lose by a no deal scenario. For him, a no-deal outcome isn’t a horrible eventuality at all, but something that can be turned into a positive, since he is a great philanthropist: "We don't have legally to pay any money at all - under international UK and EU law, if we are going to leave with no deal we have to pay no money whatsoever, we can immediately lift the tariffs [on shoes, clothing and footwear] that make life for the poorest so much harder. No deal is in fact a reasonable option - it's not the best option, but it is a reasonable one."
Brexiteers like Rees-Mogg, have tried to “spin the fall of the pound as a positive,” said Emma Barnett, but Rees-Mogg didn’t take any of this seriously. He continued arguing that “The fall of the pound is one of the automatic stabilisers in the economy. This has happened before. This is very important and it's beneficial. The fall of the pound has helped the economy.”
Despite the noise from Somerset, Carney and his BoE colleagues would assess the situation and the recent positive data on the economy and vote for a possible interest rate hike next week. Markets have already priced in the interest rate hike in November because of Carney’s previous hawkish tone, so he can no longer cry wolf.