Bank of England governor Mark Carney has praised the benefits of the EU for the UK, while warning that non-Euro states need more safeguards. In other words music to David Cameron’s ears, as he renegotiates Britain’s membership ahead of the as yet unscheduled in-out referendum.
Carney said the UK was in some ways ‘the leading beneficiary of the famous ‘Four Freedoms’’ of movement, capital, goods and services across borders.
‘Broadly speaking, the evidence suggests that UK has successfully harnessed the benefits of openness afforded by its EU membership while avoiding some the drawbacks of reduced flexibility from which some continental European economies suffer,’ he said, in a speech at Oxford University on Wednesday.
Carney wasn’t entirely full of praise for the EU, though, arguing for ‘clear principles to safeguard the interests of non-euro member states.’
‘It is important that any future EU legislative measures, designed to meet the needs of deeper integration in the euro area, do not adversely affect the Bank of England’s ability to ensure the stability of the UK financial sector or compromise the single market,’ he said.
That’s pretty much in tune with the prime minister. Although Cameron hasn’t committed to campaigning for staying in the EU, his pitch is for a ‘reformed Europe’. Moreover, ministers have stopped telling businesses and others to stay out of the debate until he’s sorted said reforms.
Meanwhile, chancellor George Osborne, the current frontrunner to replace Cameonon as Tory party leader when he steps down before the next General Election, gushed about Carney’s intervention.
‘Mark Carney’s very impressive speech sets out how EU membership has made the British economy more open and dynamic, but as the Eurozone integrates why we need to safeguard the interests of non-euro members like Britain," he said. ‘I completely agree. That’s why these safeguards are at the heart of our renegotiation.’
However, the Bank isn’t completely in concert with Cameron, who wants to end the completely free movement of people to assuage populist concerns over benefit-scrounging, job-stealing EU migrants. A report accompanying Carney’s speech said many UK companies had been able to expand because of mobile EU workers.
It also pointed out that ‘rates of movement between member states of the EU are low compared with movement within federal countries like the US. Around 2.5% of the US population relocates to a different state every year while in the EU the equivalent figure is 0.3%.’
Some Tory backbenchers did question the independent Bank getting involved in ‘political’ issues. But Carney made certain to point out that the report was ‘solely concerned with how EU membership affects the Bank’s ability to achieve our core objectives of maintaining monetary and financial stability.’
‘It is not a comprehensive assessment of the pros and cons of the United Kingdom ‘being in Europe’,’ he added.
And fair enough – why shouldn’t the Bank of England comment on factors that affect how they do their job? For MT’s part, we’re glad to see a balanced, heavyweight intervention that doesn’t pander to Daily Mail readers.