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Bank of England defends Brexit warning

Press AssociationPress Association 15/05/2016 Gavin Cordon

The Bank of England governor has strongly defended his warning that a vote to leave the European Union could tip Britain into recession.

Mark Carney faced calls for his resignation - with Conservative MPs accusing him of straying into politics - after the bank's monetary policy committee warned last week of slower growth and higher inflation if there was a vote for Brexit.

However, appearing on the BBC's The Andrew Marr Show, Carney insisted he was not entering into the wider referendum debate but that the bank had a duty to explain its thinking and potential risks to the economy.

"We don't just have a responsibility to be fair and not pop up after the vote and say 'Oh by the way this is what we thought at the time' but we also have a responsibility to explain risk and then take steps, because by explaining what we would do to mitigate them we reduce them. That is the key point - ignoring a risk is not to reduce it," he said.

"If we're taking a judgment as a committee and changing policy because of it - we're putting out billions of pounds of liquidity facilities, we're getting banks to raise capital against these type of risks - if we are potentially going to change the path of interest rates or other instruments of monetary policy because of certain things manifested, we have a duty to explain that to the British people and to parliament."

However, the pro-Brexit Energy Minister Andrea Leadsom said his comments risked creating the financial instability it was supposed to prevent.

"It was an incredibly dangerous intervention. The core job of the Bank of England is to ensure financial stability. That's it. That is their job," she told The Andrew Marr Show.

"To get involved in some purely speculative 'What might happen, what might businesses do?' - that's just not inside their remit.

"They're not there to promote financial instability and that's what they have done."

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