Can the Bank of England Really Take Credit for the Post-Brexit Boom?
In the months leading up to June’s Brexit referendum, the British public found themselves bludgeoned by a series of increasingly dire warnings concerning the consequences of a vote to leave the European Union. The campaign of scaremongering, quite self-consciously engaged in by supporters of the EU, ran the gamut from concerns that the UK might be excluded from the Eurovision Song Contest, to warnings by then Prime Minister David Cameron that Brexit could trigger the start of World War Three. Far more commonplace, however, was a seemingly ceaseless procession of warnings that a vote to leave the European Union would cause a recession in the British economy.
During the spring and early summer of this year, scarcely a week went by during which some establishment figure or organisation – from British Chancellor of the Exchequer George Osborne, to the IMF, to George Soros – did not make headlines in the UK with their grim predictions for the recession which would surely result from a decision to leave the EU. Indeed, Mr Osborne went so far as to publish a draft of the “emergency budget” which he anticipated would be required in the aftermath of a Brexit, an outcome which he prophesied would result in half a million British job losses. He further threatened that he’d have to make up for a 30 billion budgetary ‘black hole’ by cutting spending on the National Health Service, the state healthcare monopoly which Margaret Thatcher’s Chancellor, Nigel Lawson, famously described as ‘the closest thing the English have to a religion.’ The British press were particularly keen in their attention to the the warnings of Bank of England Governor Mark Carney, who repeatedly made it known that he foresaw significant negative impacts on the employment and growth rates resulting from a possible Brexit.
This post was published at Ludwig von Mises Institute on Sep 19, 2016.