Mark Carney said Brexit could cost jobs, raise prices and might lead to a 'technical recession' © Reuters
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With five weeks to go to Britain’s referendum on its EU membership, the outcome is too close to call. The latest Financial Times poll of polls shows the campaign for the UK to remain in the bloc is supported by 46 per cent of voters while those seeking to leave are on 43 per cent. The margin of error for surveys of this kind means the result could go either way.

With the gap in the polls so narrow, and the stakes so high, it is no surprise that the referendum campaign has this week become a good deal more animated. David Cameron tried to inject passion into the Remain case by arguing that Brexit would put “peace and stability” at risk. Boris Johnson was quick to mock the prime minister for appearing to suggest that Britain’s departure might trigger the third world war. Even among those arguing for Britain to stay in the EU, some saw the prime minister’s warnings as unnecessary hyperbole. After all, only a few months ago, Mr Cameron was threatening to back the UK’s withdrawal from the bloc if Brussels failed to grant him concessions restricting welfare payouts to EU workers.

Away from the political knockabout, a more considered intervention has been made by Mark Carney, the Bank of England governor. In his most outspoken comments on the matter, he said that Brexit could cost jobs, raise prices and might lead to a “technical recession”. This provoked a furious response from the Leave campaign, with one Conservative MP accusing the governor of acting “beneath the dignity of the Bank of England”.

Mr Carney was right to speak as he did. Understandably, some at the BoE feel the institution should only make predictions based on existing government policy, which, in this case, is to stay in. But the governor would have been open to criticism if Britain were to enter a recession after leaving the EU and the bank had not given voters advanced warning of the risks.

Mr Carney’s intervention should also be seen in a wider context. It is one of a series of assessments by the Treasury, the OECD and Christine Lagarde, managing director of the IMF, all of whom have warned of the severe economic consequences of Brexit.

The ritual response of the Leave campaign is to criticise the individuals and institutions making these forecasts, questioning their credibility and suggesting they were once cheerleaders for Britain’s entry into the euro. But the Leave camp has failed to counter their substantive argument that Brexit would result in a significant reduction in UK economic output.

The Brexiters have always been hobbled in this debate because they fail to provide a coherent explanation of what the UK’s trading relations would look like after leaving the bloc. Michael Gove, the justice secretary, has proposed that the UK should join a European free-trade area stretching from Iceland to Turkey. But such a zone does not exist. Mr Johnson said this week that the UK could trade with the EU in the same way that the US does. This does not explain what obligations Britain would have to meet if it were to seek access to the single market.

The battle is far from settled. After waiting so many years for this referendum, the Outers still have plenty of passion. And as the pro-Europeans conquer more of the economic domain, the Leave side is likely to default to campaigning over immigration and the free movement of EU workers, issues that have deep resonance with the public. As the fight for Britain’s future in Europe intensifies, the Remain camp should take nothing for granted. But on the economy — the argument that truly matters — its position is unassailable.

Copyright The Financial Times Limited 2017. All rights reserved.
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