Mark Carney’s reaction to the historic Brexit vote is 'catastrophic' for the UK
Brian Sturgess, the chief economist and managing editor of World Economics magazine, has produced a damning analysis of Mr Carney’s decision to cut interest rates and print more money in the response to Brexit.
The intervention comes at a time when questions continue to be asked about Mr Carney’s future after he agreed to stay at the head of the Bank until 2019, leaving two years early.
Pressure has mounted on him to go after his hamfisted role supporting the Remain campaign’s Project Fear in the EU referendum and subsequent criticism of his actions by Theresa May.
As long as government borrowers can rely on the ‘kindness of strangers’, there are few incentives for change
In October last year she took the unusual step of highlighting the "bad side-effects" for savers of his interest rate cuts.
In his paper “Stop Depending on the Kindness of Strangers”, Mr Sturgess, a former economic advisor to the European Commission who campaigned for Brexit, has warned that the Governor is condemning the British economy to being trapped in “a vicious spiral.”
The analysis is supported in a foreward by former deputy chairman Barclays Sir Martin JacombCORR who said he hoped it will “help persuade those in authority to decide on a fundamental change.”
Mr Carney agreed to stay at the head of the Bank until 2019
Mr Carney played a key role in David Cameron’s now discredited Project Fear campaign and reacted to the brexit vote by cutting interest rates to just 0.25 per cent and printing an additional £60 billion of new money further undermining the value of the pound and hitting people’s savings.
The paper is the latest attack on Mr Carney who has refused to apologise for being part of the Project Fear campaign even though the Bank of England’s analysis has shown that it was wrong and Britain is instead booming after the Brexit vote.
Mr Sturgess is one of several commentators to warn that Mr Carney’s decision in August after historic vote was rushed and damaging to the economy rather than providing the stability he claimed he wanted.
The head of Bank of England played a key role in David Cameron’s Project Fear campaign
Mr Sturgess warned: “This decision may in time be seen to be as misguided as previous Bank of England catastrophic mistakes.”
He compared it to the economic crisis in the 1920s started when Winston Churchill as Chancellor forced the Bank of England to re-adopt the gold standard at an inflated rate causing a financial crash.
Mr Sturgess lampooned Mr Carney for saying Britain can “rely on the kindness of strangers.”
He said: “Unfortunately, as long as government borrowers can rely on the ‘kindness of strangers’, there are few incentives for change.”
Britain is booming after the Brexit vote
Theresa May's Brexit plan
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Continued cooperation with the EU to tackle terrorism and international crime.
He warned that a low interest rate environment is also providing a disincentive for private borrowers to reduce their borrowing.
He added: “The danger is that the longer it takes to return to normality, the greater the probability that a future financial shock will be damaging.”
He said that Mr Carney was locking the Bank in a “vicious spiral in which it must keep buying more debt to keep the interest paid by the Government low.”
And he added that as a result of Mr Carney’s decision making there are now “question marks” over whether the Bank of England can remain independent from politicians.