Matthew Lynn

Mark Carney is finally right about Brexit

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Cripes. At this rate the CBI will be putting out reports on Brexit's potential benefits, George Osborne will be reminding us he could always see its upside, and even the FT will be running leaders saying Brexit doesn’t quite mean the end of the world. There have been plenty of twists and turns in our tortured departure from the European Union but few quite so unexpected as the apparent conversion of the Governor of the Bank of England Mark Carney to the cause.

In a speech yesterday, Carney didn't opt for any of the apocalyptic stuff – no food on the shelves at Tesco, pensioners dying in hospitals because of a shortage of medicines, slight delays at the Tuscany airports – but instead he took a more measured, reasonable approach. The man who was one of the overlords of Project Fear argued that our departure from the EU might well be the beginning of a more balanced, inclusive way of managing the economy. “Brexit is the first test of a new global order and could prove the acid test of whether a way can be found to broaden the benefits of openness while enhancing democratic accountability,” he said. “Brexit can lead to a new form of international co-operation and cross-border commerce built on a better balance of local and supranational authorities.” Sure, there were still risks, especially if we crash out without a deal, and there are some signs of investment slowing. But it might also lead to more trade in services, especially for smaller and tech based companies, which would spread the benefits of growth more evenly than the existing system.

Once you get over the initial shock of Carney having anything positive to say about our departure from the EU at all, there are two important points in Carney’s speech.

First, he happens to be right. The existing trade rules favour manufactured goods and big companies, which is why the giants of the FTSE and the CBI are so enthusiastically in favour of them. But they don’t do a lot for smaller, service-based companies, which is what the UK happens to be strong in and where most of our growth is going to come from. Just as significantly, they erode local accountability and democracy and create an ever-widening distance between ordinary workers and the people who govern them. The UK, if it can get its departure right, has the opportunity to work out a more balanced system, and one that might turn into a template for the rest of the world.

Second, if a leading member of the global technocratic elite like Mark Carney can finally get Brexit, then perhaps the rest of his tribe will as well. A huge amount of energy has been devoted to arguing that Brexit has to be an economic catastrophe, that no good can come of it and it will condemn the country to ruin. But it was not as if the old system was working so well. Growth across Europe has stagnated, youth unemployment is crushing, inequalities have grown wider and trade and innovation has fallen behind the rest of the world. In fact, if the likes of Carney spent more time trying to shape a liberal, open Brexit, it might well work out for the best for this country and for our trading partners as well. And that would be another surprise.