The Square Mile would “without question” lose business if Britain votes to leave the European Union without a continuation of cross-country financial sector agreements, Bank of England governor Mark Carney has warned.
Speaking to MPs on the Treasury Select Committee earlier today, Carney said he would expect some firms to move operations to the European Union following a so-called Brexit, saying: “I’d say a number of institutions are contingency planning for that possibility.”
Carney also cautioned that the UK leaving the EU was the “biggest domestic risk to financial stability”, saying Brexit would breed uncertainty and deal a short-term blow to growth and sterling, as well as foreign investment.
Despite his stark warnings, Carney repeatedly told MPs that the bank would not make any formal recommendation on the UK’s EU membership in the run-up to the referendum on 23 June.
In a heated exchange, Carney rejected claims from eurosceptic Tory MP Jacob Rees-Mogg, who said the governor was pushing the same arguments as the pro-EU campaign with “speculative” comments that were “beneath the dignity of the Bank”. Carney said Rees-Mogg’s accusations were “completely unfounded”.
Separately, in a letter released today addressed to Andrew Tyrie, the Conservative MP who chairs the Treasury Select Committee, Carney said Britain's membership of the EU had reinforced the “dynamism of the UK economy”, and that the tie-up had helped the UK grow. Carney also used the letter to back Prime Minister David Cameron’s EU renegotiation package, saying the deal “delivers a number of protections and additional tools that will help safeguard the Bank's ability to continue to achieve its statutory objectives”.