Carney insists warning about Brexit was Bank of England's duty

The Bank of England (BoE) Governor Mark Carney told the Treasury Select Committee that he had a duty to speak on the potential concerns facing the British economy in the event of Brexit.

Speaking before MPs on Tuesday (12 July), Carney was asked by Committee chairman Andrew Tyrie whether the BoE had deliberately peddled "scare stories" and "phony forecasts" in the lead-up to the European Union referendum to convince people to vote for the Remain campaign, as alleged by some pro-Brexit campaigners.

However, the BoE governor reiterated members of the Financial Policy Committee (FPC) had a duty to assess Britain's economic and financial situation in the run-up to the referendum.

"We have an obligation to make these assessments," he said.

"The debate cannot be about whether we should make these assessments. The debate can be about whether we made the right assessments, not whether we should have made the assessment."

In March, the BoE outlined the risks of leaving the EU but Carney stressed the decision to warn about the implications of leaving the 28-country bloc was a communal decision taken by the Committee.

"The chair doesn't guide conclusions," he said. "It has robust discussions and what we should do to respond to those risks. I did not prejudge the lines of those policy committees. Nor could I. That's not the way the system works."

Carney added the minutes of the BoE meetings show the decision to warn about Brexit clearly mirrored the views of the Committee.

"What's in the record, and the FSR, are the views of the FPC," he said. "They're not pre-judged or pre-decided, they're based on robust evidence and discussion."

Asked by Labour MP Rachel Reeves about a reduction in lending, Carney added he did not expect the Brexit vote to restrict credit availability, although he warned demand for credit and risk-taking could be impacted. Last week, the bank opted to lower the amount of capital banks had to hold, a decision that was aimed at delivering a message that credit is available, the BoE Governor explained.

"The message we're trying to send to households and businesses...is they should be able to get credit... This is not 2007 or 2008," he said.

"The amount of risk they're willing to take...will be a function of their views of the general economic environment."