British economy: open and dynamic?

Mark Carney Bank of England

This week, Bank of England Chief Mark Carney has warned that financial regulations that are not flexible are the reason that the bank finds it a struggle to watch over the UK’s economy.

An example Carney gave was that the EU bankers’ bonus cap is restricting the amount of pay that can be earned back when risks are taken or there is poor conduct internally. Carney also criticised how insurance companies are regulated and condemned Brussels for not taking non-euro members into account, as CityAM reports.

“Actions to complete European Monetary Union should be taken with regard to their impact on all members of the European Union. From the Bank of England’s perspective, steps to ensure financial stability for those within the euro area should not impede the achievement of financial stability for those without,” Carney reiterated.

CityAM also revealed that Osborne has praised Carney for his “impressive speech” as it explains how the dynamic nature of the British economy has proven the benefit of EU membership, but went on to agree with the chief. “The Eurozone integrates we need to safeguard the interests of non-euro members like Britain. That’s why these safeguards are at the heart of our renegotiation,” Osborne highlighted.

Despite this, Carney has refused to take a stance on the EU referendum but his speech did allude to his thoughts on how Britain is at advantage by being an EU member. “Broadly speaking, the evidence suggests that the UK has successfully harnessed the benefits of openness afforded by EU membership while avoiding some of the drawbacks of reduced flexibility from which some continental European economies suffer,” Carney said according to CityAM.

The CityAM also spoke to the founder of SCM, the London based investment firm, Gina Miller about Carney’s speech. “I wonder if this speech is directed at the banks who have said that if the UK leaves the EU, they would leave the UK,” Miller pondered.


Related reading