Matthew Lynn Matthew Lynn

The Bank of England should butt out of the Brexit debate

Unelected. Technocratic. Exercising a great deal of power over people’s lives, without much in the way of accountability. Staffed by well-meaning, over-educated experts, big on theories and short on experience, and run by a smooth globe-trotting boss who is immaculately plugged into the Davos set. It is not hard to see why the Bank of England, especially under its Canadian Governor Mark Carney, is instinctively pro-EU. It looks across to Brussels and sees an institution very like itself.

So it is no great surprise to see the Bank making subtle, and not so subtle, warnings, about the risks of the upcoming referendum. It was at it again today. Its decision to leave interest rates on hold was no great surprise – after seven years at 0.5 per cent, no one is exactly holding their breath on that one anymore. But the minutes of the decision contained a dig at the Leave camp, arguing that ‘much of the fall in sterling recently’ was the result of the referendum, and that it ‘raised questions’ about whether the decline would persist. Worse, some investment had suffered because of the ‘uncertainty’ over the vote, it argued. Well, perhaps. But the Bank would be far better off staying out of the Brexit debate – for two important reasons.

First, it should keep well away from Project Fear. What happens if it keeps telling us that sterling will collapse and the economy will be in ruins if we leave, and then, come 24 June, that is exactly what we do? You could hardly blame global investors for the dumping the pound as fast as possible. No less an authority than the Bank of England will have told them the country is going down the tubes. In that situation, the Bank will want to be reassuring the markets that everything will be fine.

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