The head of the Bank of England described Britain's potential exit from the European Union as the single biggest domestic risk to the nation's economy — even as he insisted the bank would remain neutral in the debate.
In testy exchanges with members of a House of Commons committee, Governor Mark Carney tried to dodge every effort to pin him to a position that either the "in" or "out" campaigners might use ahead of a June 23 referendum on EU membership.
He said the bank would not make a recommendation on the vote, but it was clear from his testimony that the matter has serious consequences for the EU economy.
"The issue is the biggest domestic risk to financial stability because, in part, of the issues around uncertainty," Carney said. The debate over continued EU membership also has the potential to "amplify risks" surrounding trade and investment, housing and financial markets, he said.
However, he said international risks, such as recent volatility in China, were a greater problem for Britain's domestic economy.
Carney said that "without question" Britain's financial center would lose business if the nation decides to leave the EU but fails to negotiate mutual recognition agreements to replace the current "passport system," which allows financial professionals to work freely throughout the 28 nation EU. He also said he was aware that some financial firms were making contingency plans to relocate should Britain vote to leave the EU.
Despite heated questioning from lawmakers backing the campaign to leave, Carney stressed that the bank would remain focused on safeguarding financial and monetary stability and that it wouldn't be drawn into taking a stand on EU membership.
He also rejected any notion that Prime Minister David Cameron or his office might have influenced his testimony in a letter outlining his view to the committee.
Lawmaker Jacob Rees-Mogg accused Carney of coming out with the standard pro-EU lines and questioned the bank's independence in the debate.
Carney shot back: "I'm not going to let that stand."