Mark Carney has been a very successful Governor of the Bank of England. Since coming to office in June last year, the British economy has gone from strength to strength. Although Mr Carney can’t take all the credit, on his watch unemployment is falling rapidly and business confidence is at a record high. His appointment and policies have been met with general approval by the UK’s business leaders, which is to be welcomed.
So it is a shame that yesterday there were reports that the Governor thinks an EU referendum would be ‘bad for the economy’. The claim stems from the Governor’s comments on the Andrew Marr show on Sunday. In response to a question asking if the CBI was right to be worried about the ‘uncertainty’ that a referendum on EU membership might create, Mark Carney replied that ‘uncertainty is always bad for investment. It increases the value of waiting’. He also pointed out that:-
‘The uncertainties that we can influence at the Bank of England are not a European referendum or a Scottish referendum; what we can influence are uncertainties about the financial system.’
This is important: it’s not the Governor’s job to deal with the questions surrounding an EU referendum. What commentators should ask is – will a referendum actually create uncertainty (as some have claimed), and thus are businesses opposed to a vote on the EU?
The evidence overwhelmingly shows that they aren’t. Business for Britain’s definitive polling of British business leaders with YouGov showed last year that a majority of entrepreneurs support a referendum on our EU membership. Other surveys have come to a similar conclusion: Ernst and Young’s research has shown that leading investors have said that they find the idea of a UK with looser links with Europe appealing. The latest economic data backs up this positive view, with the ONS’s analysis of business investment in the UK showing no substantial change since the Prime Minister’s Bloomberg speech in January 2013:-
In fact the FTSE rose and industrial output increased after Cameron promised a referendum, while unemployment fell.