Mervyn King, the former governor of the Bank of England, has launched a stinging attack on Theresa May’s Brexit deal, likening it to the appeasement of the Nazis in the 1930s. In a sweeping attack on No 10, the Treasury and his successor, Mark Carney, the Brexit-supporting King said the political elite was allowing the…
Mervyn King, the former governor of the Bank of England, has launched a stinging attack on Theresa May’s Brexit deal, likening it to the appeasement of the Nazis in the 1930s.
In a sweeping attack on No 10, the Treasury and his successor, Mark Carney, the Brexit-supporting King said the political elite was allowing the UK to become a vassal state that would be forced to accept Brussels diktats.
King’s comments came as Carney told the Treasury select committee on Tuesday that the price of food could go up by 10% if the UK left the EU with no deal and with no plans to avoid chaos at the country’s ports.
He said Britain’s ports were not ready for a shift to World Trade Organization rules for the country’s exports and imports with the EU.
King said May’s deal was “a muddled commitment to perpetual subordination from which the UK cannot withdraw without the agreement of the EU”.
In the immediate aftermath of the 2016 referendum, the government should have prepared for the prospect of failing to secure a deal, he said.
“Instead, the government pretended that everything could be postponed until an imaginary long-term deal could be negotiated. This was naïve at best, and in the event has proven disastrous. And so Project Fear turned into Project Impossible. It is incompetence on a monumental scale,” he added, in a comment piece for Bloomberg.
The Whitehall elite had been proved wrong during previous periods of uncertainty and been found to be wrong again with predictions of an economic downturn following the referendum in 2016, he said.
“In the 1930s, with appeasement; in the 1970s, when the British economy was the ‘sick man’ of Europe and the government saw its role as managing decline; and now, in the turmoil that has followed the Brexit referendum. In all three cases, the conventional wisdom of the day was wrong,” he said.
With less than than four months before Brexit, it remains unclear whether Britain will leave the EU with a transition deal that ministers believe will prepare the way for a trade agreement that gives UK companies favourable access to continental markets.
Last week, the BoE warned that Britain would suffer an economic shock if it left the EU without a deal.
Appearing before MPs on Tuesday, Mark Carney, King’s successor, defended Threadneedle Street’s record from critics who accused it of producing “dubious” and “highly speculative” forecasts of a deep recession following a no-deal Brexit.
Carney said the scenarios, which were commissioned by parliament and set out by the BoE last week, were based on detailed work to ensure banks and other lenders were ready for Brexit, and were not off-the-cuff predictions.
He said the forecast of a 8% fall in GDP, triggering a deep recession, was reasonable after it became clear that Britain’s ports and most of its businesses were unprepared for leaving the EU without a deal.
“There’s no exam crisis. We didn’t just stay up all night and write a letter to the Treasury committee,” Carney said at a hearing in parliament. “You asked for something that we had, and we brought it, and we gave it to you.”
King, said he backed the comments of the Nobel-prize winning economist Paul Krugman, who described the Bank’s Brexit calculations, which included a catastrophic loss of trade, investment and productivity, as “dubious”.
Carney said stress tests on the banks had shown they could withstand any Brexit shocks and allow people to sleep “soundly at night”.