Bank of England Governor's landmark speech welcomed by pro and anti-EU campaigners

Mark Carney has delivered a speech outlining how UK membership of the EU affects the Bank of England.


By William Louch

22 Oct 2015

Mark Carney, Governor of the Bank of England, has given a speech outlining how UK membership of the EU affects the way the Bank of England is run.

He made a strong case for the UK remaining in the EU, though warned of the dangers of a Europe dominated by Eurozone countries. Carney hinted at the need for renegotiation to secure safeguards for the City of London, something that David Cameron, the UK Prime Minister, has already identified as one of four "vital areas" where he is seeking to secure reform.

Carney made a point of depoliticising the speech, saying, "Our report is solely concerned with how EU membership affects the Bank’s ability to achieve our core objectives [ . . .] it is not a comprehensive assessment of the pros and cons of the UK ‘being in Europe.'"


However, Carney's speech was seized upon by both pro and anti-EU campaigners, with both selectively adopting parts of the speech to back their position.

UK Liberal MEP Catherine Bearder reiterated, saying, "The Bank of England's intervention confirms what we already know: being in the EU brings huge benefits to the UK economy."

"Instead of retreating to the side-lines, Britain should stay and lead reform in Europe from within."

Conservative MEP Richard Ashworth interpreted Carney's speech in a similar vein, saying, "He [Carney] produced a rational analysis of the economic facts to explain that being in Europe strengthens the UK's competitiveness in a globalised world."

He also highlighted the importance of focusing the upcoming debate on UK membership of the EU on "facts and not emotions."

Steve Baker, a Conservative MP and supporter of Vote Leave, one of two anti-EU campaigning groups, said, "Mark Carney has sent a clear warning about the dangers of Eurozone countries giving more power to Brussels.

"He says that the EU's next treaty will give itself even more power and warns that this creates risks for the UK and how the Bank of England safeguards our economy."
"British jobs will be much safer if we have control of how our economy is regulated. The only way to get control is to Vote Leave and negotiate a new UK-EU deal based on free trade and friendly cooperation."

A report released by the Bank of England alongside Carney's speech, offered further detail on how UK membership of the EU impacts on the UK economy.

The report, titled: 'EU membership and the Bank of England,' said that EU membership "reinforces the dynamism of the UK economy," and creates an economy that can "grow more rapidly without generating inflationary pressure or creating risks to financial stability."

Carney also highlighted the importance of the freedom of movement of labour in helping the economy grow. He said, "The openness associated with the free movement of labour can help better match workers with firms alleviating skills shortages and boosting the supply side of the potential growth of our economy."

He added that a flexible labour market across the EU "helps the economy to absorb shocks" and has led to higher employment rates and "real prospects for higher wages and better living standards".

He did, however, warn that increased economic and financial openness - a by-product of EU membership and closer integration – has "increased the challenges to UK economic and financial stability."

He called for "further financial and fiscal integration with the euro area," describing it as "necessary" though emphasising the importance of ensuring that "any future EU legislative measures…do not adversely affect the Bank of England's ability to ensure the stability of the UK financial sector."

As Cameron prepares to outline his renegotiation demands, he will be pleased to have Carney's backing, on a key area of his renegotiation plans.

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