EXCL MPs demand Bank of England produce 'frank' analysis of Brexit before crunch Commons vote

Posted On: 
11th October 2018

Senior MPs have called on the Bank of England to carry out "full and frank" analysis of the impact of Brexit before the Commons votes on Theresa May's final deal, it has emerged.

Mark Carney is Governor of the Bank of England
Credit: 
PA Images

Treasury select committee chair Nicky Morgan has today written to Mark Carney calling on the central bank to spell out what leaving the EU will mean for "the economy, monetary policy and financial stability".

In a bid to ensure MPs go into the meaningful vote with their “eyes wide open”, the Tory former minister has asked the Bank of England Governor and the Financial Conduct Authority to analyse any deal Theresa May strikes with the EU as well as the impact of leaving the bloc without an agreement.

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She has also asked them to set out what will happen to the UK economy if Britain fails to secure a trade agreement at the end of the two-year Brexit transition period.

The House magazine can reveal that Ms Morgan has demanded that the analysis is produced “in good time” before MPs are asked to vote on any deal the Prime Minister strikes with Brussels.

In her letter to Mr Carney, seen by The House, committee chair Ms Morgan wrote: “I am sure the Bank under your leadership will not demur from providing a full and frank assessment of the consequences of leaving the EU, under different scenarios, for the economy, monetary policy and financial stability.

“Accordingly, the committee does not intend to dictate how this work is presented; but I would note that a complete analysis of the economic effects, and the implications for monetary policy, may warrant alternative sets of forecasts for each scenario, and an assessment of the impact on prices in different parts of the CPI basket.”

And Ms Morgan has asked Mr Carney to provide public clarity on the briefing he gave to the Cabinet in September that said house prices would fall by a third in a no-deal scenario.

“Parliament must be provided with a full and frank assessment of the consequences of implementing the Withdrawal Agreement and future relationship with the EU before it comes to vote. Without such analysis, any vote cannot be considered meaningful,” Ms Morgan said.

“When negotiations between the Government and the European Commission have concluded, the Committee has asked the Bank and the FCA to publish its analysis in good time before any Parliamentary votes on the Withdrawal Agreement and future relationship.

“The Bank and the FCA should provide analysis of any deal agreed, and of a ‘no deal’ scenario, in the event of a breakdown in negotiations or a parliamentary vote against the Withdrawal Agreement. They should also consider providing analysis for the scenario in which the UK leaves the EU with no trade agreement at the end of a transition period.

“This analysis will ensure that Parliament’s decisions are based on the best possible evidence.”

The House also understands that the committee has appointed Prof Sir Stephen Nickell, a former member of the OBR spending watchdog's Budget Responsibility Committee, as a specialist adviser to work on its Brexit inquiry and scrutinise the Government’s projections.

‘EYES WIDE OPEN’

Speaking to The House magazine, Ms Morgan added: “We don’t know how much time we’re going to have after a deal is finalised before there’s a parliamentary vote.

“This is a critical decision that is going to define the UK’s place in the world for decades to come. This is a major change in our foreign policy and economic policy.

“The reason I don’t support a second referendum is I think it should be 650 representatives who have been elected who make the final decisions.

“But they’ve got to be informed and they’ve got to be briefed and they’ve got to know that they’ve got access to the numbers and to advice and everything else. I see our role in the Treasury Select Committee is to make sure that they get that.”

Brexiteers who are sceptical of Treasury and Bank of England forecasts are likely to be angered by the news.

Last month, ERG chair Jacob Rees-Mogg branded Mr Carney a "wailing banshee" whose warnings about Brexit cannot be taken seriously.

TREASURY

In a separate letter to Chancellor Philip Hammond, Ms Morgan requested that Treasury officials be allowed to engage with Prof Nickell as part of his work advising on the economic impact of the withdrawal agreement.

In July, MPs asked the Treasury to set out the impact of a Brexit deal on national income, income per head, household incomes, employment, exports and imports, the exchange rate and labour productivity, alongside a distributional analysis on the effect on households in each of 10 income bands.