After being savaged for ‘Project Hysteria’ last week, the Bank of England will enter the lion’s den again tomorrow. An unrepentant governor Mark Carney is, when he comes in front of MPs on the Treasury committee, likely to brush off accusations he has been playing politics with his nightmare scenarios for a no-deal Brexit. His
After being savaged for ‘Project Hysteria’ last week, the Bank of England will enter the lion’s den again tomorrow.
An unrepentant governor Mark Carney is, when he comes in front of MPs on the Treasury committee, likely to brush off accusations he has been playing politics with his nightmare scenarios for a no-deal Brexit.
His view is that it’s the job of politicians to decide what kind of Brexit we have, but that he is perfectly within his rights to point out the pitfalls on the road before we get to wherever it is we are going. It’s not only his right, but his duty.
Stepping into the lion’s den: Bank boss Mark Carney is set to face MPs on the Treasury committee
Most business people can’t afford the luxury of political purism and just desperately want certainty on the direction of travel, which is why they are lining up behind Theresa May and her imperfect but pragmatic deal.
The Bank has been investigating whether firms are ready for Brexit, and the answer is sobering. Its findings will show that fewer than half have put contingency plans in place for no deal. Frankly, it is surprising it is not worse.
Businesses are not prepared for Brexit, not even remotely. How can they be? Planning is impossible, because it involves a deep dive into Donald Rumsfeld territory, when the former US defence secretary famously talked of ‘unknown unknowns’.
Without knowing what sort of Brexit we are going to have, executives and entrepreneurs are paralysed. It is not practical for them to war-game all the possibilities.
When even large, rich and sophisticated companies such as chemicals giant Ineos crave a deal – despite the fact founder Sir Jim Ratcliffe is a Brexiteer – it is time to take their worries very seriously indeed. If it is going to be hard for Ineos, how much worse for smaller firms in the supply chain?
Take one very basic fact. For the past 40 years, firms have been trading straightforwardly with the EU. HMRC estimates between 145,000 and 250,000 exporters have never completed a customs declaration, which they will have to start doing if there is no deal.
A relatively small issue for each individual business, perhaps, but on that scale it soon snowballs. If companies are thrown into disarray by a no-deal Brexit, it will have grave consequences for the economy.
This isn’t Project Fear. The Bank’s conclusions on the unpreparedness of businesses are based on intelligence harvested by its network of agents up and down the country. Unlike many pronouncements on Brexit, its view has a solid foundation in reality.
Companies are stocking up on supplies in case of delays at the border, and building cash buffers or arranging bank facilities to see them through any disruption. Fortnum & Mason, the Piccadilly emporium, is stockpiling two months’ supply of champagne, so at least we shouldn’t run out of fizz.
All of this takes time and money and is a diversion from more productive activities. This is why the Prime Minister is largely preaching to the converted in her meetings with business leaders, many of whom now fervently want her deal to go through.
MPs should step out of the Westminster hothouse and listen to the businessmen and women in their constituencies. These are the entrepreneurs bringing prosperity to communities. They are pragmatists. They just want a solution that lets them carry on exporting, manufacturing and making Britain better off. Failing to listen to them would be arrogant and dangerous.