Former Bank of England governor: staying in single market makes no sense

Britain should stop pretending that Brexit is compatible with staying in the single market, and decide its own immigration policy, a former governor of the Bank of England said on Monday.

Mervyn King, who was the Bank's chief for ten years until 2013, told the BBC's Today programme that all sides should look at the vote to leave the EU as a positive opportunity.

"There are opportunities to Brexit that we should take... and I think we should look at it in a more self-confident way than either side does at the moment," he said.

"I don't think it makes sense for us to pretend that we should remain in the single market, and I think there are real question marks about whether we should stay in the customs union."

King's comments are at odds with other mainstream economists, who largely support Britain's continued membership of the single market.

Additionally, any signs that Britain may lose access to the market - in which goods and services can be traded without tariffs - has resulted in a decrease in the value of sterling.

Yet leading EU politicians have said that continued access to the single market is only possible with continued free movement of EU citizens.

King added: "I think the referendum made it clear that people wanted control over immigration.

"That is not negotiable and it would be a big mistake to put it into the basket of things that we have to negotiate with former partners in the EU."

David Blanchflower said Lord King's comments should be ignored Credit: Reuters

An ex-member of the Bank's Monetary Policy Committee said Lord King's comments were "political" and should be ignored.

David Blanchflower told LBC radio: "I don't think Mervyn King is a credible source on this.

"If you look back, there are three huge mistakes he made. First, he was the governor of the Bank of England who never spotted that Northern Rock was going to fail.

"He was in charge when the biggest recession in 300 years came. The RBS failed in September 2008 and he had no idea that was happening.

"In 2010, he advised the government that austerity ought to be really good for growth, and that turned out to be a disaster.

"I don't think he is a credible source on any of that and we shouldn't believe in what he says in terms of his forecasts."

Professor Blanchflower added that "great uncertainty" is coming and that companies are holding back on investment and hiring.

"We have no idea what is coming. It is a considerable worry. My expectation is - and virtually every economist now thinks - that the economy is going to slow pretty fast as the uncertainty rises."