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George Osborne asked to explain involvement in Bank of England and IMF reports

Published 15/05/2016

Mr 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
Mr 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

Chancellor George Osborne is facing demands to explain his role in the release of back-to-back reports by the Bank of England and the IMF warning of the dangers of a vote to leave the European Union.

Former work and pensions secretary Iain Duncan Smith - who is campaigning for Leave - challenged Mr Osborne to release details of any communications between the Treasury and the bank, including emails and telephone calls, ahead of the publication of its report last week.

He also questioned whether the Chancellor was involved in arranging for the head of the IMF, former French finance minister Christine Lagarde, to release her report the following day.

"Is it a surprise suddenly on Thursday then followed by Friday you have two reports coming out? Do you think they told each other or talked to each other about what they were doing? I wonder about that," he said on BBC One's Sunday Politics programme.

"The one continuum in all of this is of course the Chancellor who is out immediately supporting the Governor and he then sits beside Christine Lagarde and when she gets up she openly thanks him and the Treasury for their assistance in making their report."

Mr Duncan Smith, who used to sit alongside Mr Osborne in the Cabinet, echoed other Leave campaigners in suggesting that the Bank of England Governor Mark Carney had breached his duty of impartiality with his warning that a Brexit vote could lead to lower growth, higher inflation and a fall in the value of sterling.

"I think the Governor has strayed now into the expression of what is a simple, personal prediction. If you are going to be impartial you'd better be impartial," he said.

"He used to work for Goldman Sachs, we see Goldman Sachs running all the way through this. They are funding the Remain campaign and I am told by those who know him that he has always been very keen on the whole European project."

Mr Duncan Smith acknowledged that none of the major economic authorities had supported the case for leaving the EU but said he had always expected that to be the case.

"I wouldn't expect any major economic authority to be on our side in this argument. I would be completely unusual for all of these institutions not to want to back the status quo," he said.

Earlier, Mr Carney strongly defended the bank's report, insisting they were not entering into the wider referendum debate but that they had a duty to explain their 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 told BBC One's The Andrew Marr Show.

"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."

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