Douglas Carswell

02 SEP 2016

Mark Carney needs to reverse course

Yesterday's manufacturing PMI data was the biggest rise in 25 years – up 5 points since July. It's the latest piece of economic good news since the referendum. Is the Bank of England paying attention?

The "expert" consensus told us that the vote to leave the EU would kill confidence in Britain's economy - then spent the aftermath of the referendum doing their level best to kill it.

But to no avail. Two months on, markets are up. Employment is up. Export orders are up. Consumption is up. Foreign direct investment is flowing in. The pound is rising again.

Yet many of the Remain doomsayers are sticking to the script. "Maybe things are okay now", they say. "But wait till we actually leave the EU."

Aren't these the same people who said markets would price in Brexit immediately? If it's already priced in, why expect market optimism to change?

The "experts" on the touchline may not be able to see the opportunities for post-Brexit Britain, but the people who actually participate in the economy – investors, producers, and consumers – clearly can.

That's not to say economic growth is assured. But the risk we face isn't so much from the referendum, but from the policy response to it.

The big threat to the global economy is the misallocation of capital, caused by too much credit, churned out by trigger-happy central banks. To counter it, interest rates need to rise.

Instead, Mark Carney used the supposed Brexit downturn - based on July's PMI data - as an excuse to print even more money, cutting rates to new depths from already record lows.

Voting Leave hasn't made our economy sick, but the supposed public-policy cure might. The latest PMI data has removed any basis for "economic stimulus". Monetary policymakers need to swallow their pride, and reverse course.

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