Mervyn King says Treasury’s exaggerated Brexit claims backfired
The former governor of the Bank of England yesterday slammed George Osborne and his Treasury team over their Brexit campaign.
And Lord Mervyn King said they would now need to row back from exaggerated claims that left him “baffled”.
“I think the government said things it is not easy to sustain or support. If the Treasury forecasts are right and we face a recession, then it would not be right to raise taxes and cut spending. So I was baffled by the idea that an emergency budget would be either sensible in the short term or that we knew anything like enough about the longer term to make that judgment today," he said in a BBC interview.
“The Treasury is in a difficult position now because it did make forecasts that were exaggerated in terms of at least the certainty and now will have to row back.”
In a BBC interview, he also accused the Remain campaign of treating people considering voting Leave like “idiots”, noting that voters had not been impressed by “scaremongering tactics”.
He said: “I was travelling round the UK a lot at that time and I was struck by how many people said to me they didn’t like the scaremongering tactics, they didn’t like to be told that if they were to vote to leave they would be idiots.
“If you say to someone: ‘You are an idiot if you don’t agree with me’, you are not likely to bring them in your direction. It would have been enough to say there would be a great deal of uncertainty, but they went way beyond that, using precise numbers to say how much our living standards might fall.”
Calling for “a bit of calm now”, King, who was governor between 2003 and 2013, said: “I don’t think people should be particularly worried, markets move up, markets move down. We don’t yet know where they will find their level and the whole aspect of volatility is that there is a trial and error process going on before markets discover what the right level of stock markets and exchange rates actually are.”