Brexit won’t have a big impact on the European or global economies, former Bank of England governor Mervyn King said, offering a counterpoint to persistent concerns by global policy makers that the move could further dent already-weakening growth.
“I don’t honestly believe that Brexit has any great significance even for the rest of Europe, let alone the rest of the world. I don’t think the long-run economic consequences of the UK leaving the EU are particularly large,” King said, responding to questions after a speech at the IMF’s annual meetings in Washington.
He didn’t explicitly address the potential impact of a Brexit without an EU agreement, an outcome most analysts project would be far more damaging than one with a deal.
The effects of prolonged uncertainty over trade and Brexit have been an important topic of discussion at the IMF meetings. Back in London, Prime Minister Boris Johnson was forced Saturday to ask Brussels for a delay to the U.K.’s exit, though it’s not clear yet that it will be postponed.
“Britain is in the middle of the worst political and constitutional crisis for arguably several hundred years, but that is a matter of domestic concern,” King said.
The former BOE governor, who left office in 2013, has previously intervened in the Brexit debate. Last year he described Theresa May’s Brexit agreement as the “worst of all worlds.” He also criticized the BOE for wading into political territory for publishing analysis on the possible economic consequences of the divorce.
In his speech Saturday, King described the industrialized world as being in secular stagnation and said officials need to re-allocate resources to spur growth, looking beyond the use of only fiscal and monetary policy. Supply-side reforms and measures to correct unsustainable national saving rates would help, he said.
“We can see from the evidence that central banks can’t be the only game in town, because we haven’t got out of the low-growth trap,” said King, a Bloomberg Opinion columnist. “Everything now is put on fiscal policy, and I think this is again a mistake.”