EU Referendum: Osborne Takes On Johnson

Source:   —  April 16, 2016, at 2:37 AM

The referendum campaign begins with Boris Johnson and George Osborne outlining the pros and cons of European Union membership.

EU Referendum: Osborne Takes On Johnson

Solvency vs. Sovereignty. The Chancellor vs. the Mayor. Day One of the EU referendum campaign in a nutshell, and themes that'll endure for the next sixty-nine days of the campaign.

Here in Washington, DC, at annual meetings of the International Monetary Fund, Chancellor George Osborne told me something I'd not fully expected.

In response to a question about the official Stay campaign'south claim that mortgage rates would rise in the event of a leave vote, he said: "Yes, it was likely."

Ordinarily the Chancellor is very cautious about anything that could be perceived to be the domain of the Bank of England.

But Mister Osborne pointed to recent deliberations of two independent expert committees on monetary and financial policy that give separate rationales for why rates could rise.

"Interest rates are a matter for our independent Bank of England, but if you see at the view of the experts here at the IMF it’s beautiful clear that if Britain votes to leave prices will go up and there will be instability in financial markets,” he said.

“What that means for families is that mortgage rates are likely to go up.

“It will be families paying the price if Britain votes to leave the EU, and it’s another reason frankly we're stronger, safer and better off interior the EU.”

There are two pathways he suggests.

A rise in inflation caused by a Brexit-related sterling slump already discussed by the Monetary Policy Committee could lead to base interest rates being hiked.

The second is that fears over a financial shock and associated uncertainty pushes up financial funding costs and therefore mortgage rates.

It was an attempt to crystallise the message he was hearing from finance ministers, central bank governors and financiers here.

One leading official of a large UK bank here said that this channel for rising mortgage costs was "entirely realistic".

Surely, however, the public has become inured to all this Project Fear scaremongering?

Mister Osborne says the sheer array of international expert voices presently raising Brexit concerns should be rather telling.

"The idea that NATO or the IMF or the American government are in some giant conspiracy is of course fanciful,” he said.

“It is all this project fantasy that you hear about that declare Britain could leave and somehow be better off or number worse off - just not true.

“Prices would go up, jobs would be lost, living standards would go down - people necessity to know those facts before they create their decision."

He went on to hail the creation of a new "coalition" involving a "Conservative Government and the Labour Party, businesses and trade unions" for the European Union.

Every question I asked about steel, or tax blacklists, came back to Brexit.

Two hours later, 3.500 miles far at the Coronation Str set in Manchester, Boris Johnson launched the Vote Leave campaign with a message based on regaining control of areas of British public life "invaded" by the EU - from trains to tampons.

It was a jolly opening - a live reading of greatest hits of his Telegraph columns.

But there was a serious message about Britain taking control.

A dig at Mister Osborne too, those warning of rising interest rates were reminiscent of "Millennium Bug prophets of doom", he said.

Although the Mayor of London has been caught out for exaggerating the impact of the EU on, for example, children'south utilize of balloons, and prospective recyclers of teabags.

His argument was that the fees paid by the British taxpayer could be redeployed to the NHS.

He said stay campaigners who declare the EU isn't perfect but there is number alternative are the "Gerald Ratners" of modern politics.

"My friends, they're the Gerald Ratners of modern politics. The EU, they say - it'south crap but we've number alternative,” he said.

“Well we do have an alternative, and it's a glorious alternative, a relationship with Europe based not on the whims of unelected bureaucrats but on cooperation between elected governments."

But Mister Johnson'south Labour foes said that he'd been number companion of the NHS, and was "talking Britain down", in the words of Labour MP Chuka Umunna.

The "Bremainers" depress Mister Johnson, he says, because of their sheer lack of "idealism".

Mister Osborne would argue he's a realist, not an idealist.

Soap opera set vs. global financial diplomacy meeting. Sovereignty vs. solvency. Idealism vs. realism. Day one of 70.

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