Bank of England warns of Brexit losses

Bank of England Governor Mark Carney warns of the financial instability facing Britain if it leaves the EU

Mark Carney, Governor of the Bank of England. Carney has warned that a vote for the UK to leave the EU could be detrimental to the UK economy 

On March 8, Mark Carney, the Governor of the Bank of England, warned that a vote for the UK to leave the EU could cost the economy £2.04trn ($2.9trn). Carney stated that Brexit, as it has become commonly known, could impel a number of banks to move away from London, thereby jeopardising the city’s status as one of the financial capitals of the world.

Carney also suggested that a number of large institutions could already be planning a contingency move of their European headquarters elsewhere.

When speaking in front of the Treasury Select Committee, Carney guaranteed that his comments were in no way a statement on the Bank of England’s position regarding the EU referendum. Nonetheless, his comments could suggest that he is indeed advocating for Britain to stay in the EU.

Carney explained that the full impact of Brexit would depend on whether the EU chooses to grant full mutual recognition to the UK. If this is the case, then financial companies working in the UK could continue operating throughout the EU under similar terms to the ‘passporting’ arrangements that are in place at present. However, Carney also warned that mutual recognition provisions tend to take some time to come into effect.

The Governor’s comments about the domestic risks and financial instability facing the UK if it left the EU clearly angered the Eurosceptics of the committee, who went on to accuse him of promulgating ‘standard’ pro-EU sentiment. During the fiery exchange, Carney insisted that David Cameron had not influenced his opinion, and that he “will not let that stand”.

It has been clear since the announcement of the referendum that the biggest players in the British political and economic scene are divided when it comes to their opinions on whether the UK should exit the EU or not. As such, a prediction on the outcome of the vote at this stage is more uncertain than ever.