Brexit Bulletin: Factually Challenged

(Bloomberg) -- Today in Brexit: Mark Carney is pulling up Boris Johnson on his facts. 

What’s Happening?

The head of the Bank of  England has been challenging Britain’s likely next prime minister on his facts. It could be a taste of things to come. 

For the second time in a week, Carney poked holes in Johnson’s argument that the worst fallout of a no-deal Brexit could be avoided by using an arcane instrument of international trade known as Article 24 of the GATT. Despite Carney’s first intervention, Johnson continued to insist that the measure provided a “way forward.” Carney repeated yesterday that it probably didn’t. 

Carney’s term as governor continues through January 2020. That means he’s going to be in the hot seat as the potential Oct. 31 cliff edge comes into view. As the new government sets out its Brexit policy, the bank will have to make new forecasts that take the government’s plans into account. That could put Carney back in the role of reality-checker.

Johnson insists (as does his rival Jeremy Hunt) that he’ll prepare for no-deal. He aims to show the European side that it’s a viable alternative that won’t destroy the British economy. At the same time the Bank of England, judging by past form, would be offering some pretty gloomy forecasts for what a no-deal exit would mean.

Carney is loathed by hardline Brexiteers, who accuse him of fear-mongering and overplaying the economic impact of the divorce. But he was seen by many as a source of stability in the immediate aftermath of the 2016 referendum. One former policy maker called Carney the “only adult in the room.”

He might be pushed back into that position later this year.

Today’s Must-Reads

• Johnson softened his tone on Wednesday, saying there was “a million to one” chance of a no-deal exit from the EU. A day earlier he said the U.K. would leave on Oct. 31, “do or die.”
• Jeremy Hunt’s tax and spending plans would cost the U.K. £28 billion ($36 billion), the Institute for Fiscal Studies says today.
• London Stock Exchange Group Plc has defied Brexit gloom to retain the U.K.’s lead in the multi-trillion-dollar swaps business, and nabbed some of the most coveted assets in its industry.

Brexit in Brief

Stopping No-Deal | Conservative Dominic Grieve and Labour’s Margaret Beckett are backing a plan that could effectively shut off some government funding if the next prime minister presses ahead with a no-deal Brexit. It’s the latest effort by MPs to take control after failing in another bid earlier this month.

‘Little England’ | Jeremy Hunt found himself in a spot of bother on Twitter after using the phrase “Little England” to describe the kind of country he doesn’t want to emerge after Brexit. Accused of using the label for Brexit voters, Hunt insisted: “This is literally the opposite of what I said.”

Still Thinking | The Labour Party is still working on finding its Brexit position, according to a spokesman for Jeremy Corbyn. He said the party wants to stop a no-deal Brexit, and see any deal passed by parliament put to a public vote. But he also said that the party is committed to respecting the result of the 2016 referendum.

EU Citizens Safe | Both candidates have now promised to guarantee the residential rights of EU citizens. Hunt made the pledge at hustings on Wednesday, matching Johnson’s earlier pledge. Johnson said he would introduce an Australian-style points system for immigration, so that highly skilled workers can come to the U.K. but unskilled migration is restricted. 

Courting Foster | Arlene Foster, leader of the Democratic Unionist Party, is “heartened” by pledges made by Johnson and Hunt to renegotiate the Irish backstop, and said she speaks to both men “all the time.” Foster declined to comment on who she would prefer to become prime minister, but said it was important for the U.K. to leave the EU on Oct. 31. 

‘Union First’ | Scottish Tory leader Ruth Davidson — who backed Sajid Javid in the previous round — said she now backs Jeremy Hunt. “Any Conservative leadership candidate must put the Union first,” she said on Twitter.

National Unity | Ed Davey, a candidate to lead the Liberal Democrats, suggests Labour’s Yvette Cooper or Hilary Benn for prime minister in a national unity government tasked with legislating for a new Brexit referendum. His plan would need the Conservative government to fall via a confidence vote first. The aim is to provide a leader who could win cross-party support — something Jeremy Corbyn couldn’t do. 

Breakfast in Mayfair | Johnson met about 20 business people at a private club in Mayfair on Tuesday. He has lots of ground to make up: his no-deal stance frightens executives, who won’t forget his now-infamous expletives about business any time soon.

On the Markets | Use of the pound in global trade transactions slid to 6.7 percent in May, the lowest level since August 2011, according to the Society for Worldwide Interbank Financial Telecommunication, or Swift. Sterling trails the U.S. dollar’s 40 percent share and the euro’s 34 percent. It traded lower early this morning, at $1.2682.

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To contact the editor responsible for this story: Adam Blenford at ablenford@bloomberg.net, Leila Taha

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