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Mark Carney хлопает в ладоши
07.07.2016 22:55

Mark Carney's predecessor as governor of the Bank of England on Thursday praised his handling of the U.K.'s decision to leave the European Union and declared confidence that London will remain the continent's leading financial center. 

But Mervyn King expressed pessimism about the global economic outlook and the eurozone's prospects in particular, saying at an event hosted by The Wall Street Journal that both had been on an "unsustainable path" even before Britons voted on June 23 to leave the EU. 

Mr. Carney has been widely criticized by politicians who campaigned to take Britain out of the EU over his warning in advance of the referendum that an economic slowdown and turbulence in financial markets would follow. 

But Mr. King, who led the BOE from 2003 until 2013, said his successor and his other policy makers at the U.K.'s central bank had acted correctly and had "a moral and legal duty to give their view of the risks." 

He also said that tensions between the BOE and political leaders are likely to ease now that the campaign has ended. 

"The criticisms that were made were way over the top," he said. "The people who take those comments least seriously are those who made them. What people say before the vote is very different to what they will say after the vote." 

He reserved strong criticism for politicians on both sides of the campaign, who, he said, had exaggerated the costs and the benefits of either course of action, while offering economic forecasts that were too specific to be valid and therefore "frankly disgraceful." 

In particular, he said Chancellor of the Exchequer George Osborne's warning that the government might have to announce an emergency budget in the wake of a Brexit vote that could see tax rates increased and spending cuts was "absurd." 

Mr. Osborne's office declined to comment. 

Those who fear for Britain's future outside the EU worry particularly over the fate of London as Europe's pre-eminent financial center, with officials from Paris, Frankfurt and Dublin all seeking to lure banks and other financial-services companies. 

But Mr. King said the City of London's longstanding ties to the rest of the world and its accumulated expertise in a wide variety of areas, such as fund management, insurance and legal services, should enable it to survive any post-referendum setbacks. 

"I don't see London losing its role as the financial center of Europe," he said. "The City is strong, it's always changed. I'm sure that will happen again, but the underlying strengths of London will remain." 

Mr. King's main reservation about the referendum was its timing, coming as it did before it was clear how the EU would evolve as it struggles to escape a long period of low growth, an influx of migrants that has raised questions about the free movement of people within the bloc, and the re-emergence of problems in its banking sector. 

"Why make the decision now?" he wondered. 

Indeed, Mr. King indicated that a breakup of the eurozone is possible, given that in his view it can only be sustainable over the longer term if it becomes a tighter political union that allows for fiscal transfers between its members. 

"When something becomes so costly, anything is undoable and it can be managed," he said. "Other political parties could arise in Europe, and it will be the question whether those parties will attract enough support to get rid of the project." 

For Mr. King, monetary policy is powerless to resolve the problems faced by the eurozone and the wider global economy, which he said must be rebalanced in part through big changes in real exchange rates and fundamental economic overhauls. 

"The headwinds aren't temporary, they won't go away of their own accord, " he said. 

If they are confronted with another economic downturn, Mr. King expects central bankers to resort to further quantitative easing. And he stressed that there is nothing new that so-called "helicopter money" can accomplish, since it amounts to much the same as quantitative easing. 

"The most important thing they can do is make it clear that all they can do is buy time," Mr. King advised central bankers.


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