Thursday 12 May 2016 3:00 pm

Former chancellor says Carney's Brexit intervention could trigger an economic crisis

Former chancellor of the exchequer Lord Lamont has warned Mark Carney that his Brexit warnings could spark an economic crisis.

The Conservative politician, who is now part of the official campaign group, Vote Leave, said the governor of the Bank of England should choose his words more carefully as he dismissed Carney's claims that Brexit was the most significant risk to the UK economy.

Read more: Osborne clashes with Treasury Select Committee on his Brexit claims

"The governor should be careful that he doesn't cause a crisis. If his unwise words become self-fulfilling, the responsibility will be the governor's and the governor's alone. A prudent governor would simply have said 'we are prepared for all eventualities,'" Lamont, who was chancellor of the Exchequer between 1990 and 1993, said today.

His comments came in response to Mark Carney's assertion that Brexit could plunge the UK into economic slowdown. The governor said the Bank had not conducted any formal forecasting of what would happen to the UK economy if it voted to leave the EU but added one impact "could possibly include a technical recession."

Key figures from the Bank of England's Inflation Report

  2016 2017 2018
GDP growth 2.2 per cent 2.3 per cent 2.3 per cent
CPI inflation 0.4 per cent 1.5 per cent 2.1 per cent
Unemployment rate 5.1 per cent 5.0 per cent 4.9 per cent

The Bank of England's forecasts stripped out half of the currency depreciation since November and assumes that the UK votes to remain in the European Union. Producing models on current government policies is standard practice for the Bank

Anticipating a reaction from Leave campaigners, Carney also defended the latest warnings from Threadneedle Street, which raised fears of stagflation – lower growth and higher inflation – outside of the EU. He said: "It is our responsibility to analyse these risks … We have to communicate this. The political choice would be to suppress the analysis."

But Vote Leave said Carney's claims, particularly about the "sharp" depreciation in the value of a pound after Brexit were ill-founded. The group pointed out that the pound has climbed in the last month and is higher against the dollar now than at the time the referendum was announced.

Against a basket of currencies, the pound has fallen by nine per cent since November. The Bank estimated half of this was down to the referendum. Since the beginning of April, the pound has recovered by three per cent.

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