Brexit 'not a big deal' for rest of Europe, says former Bank of England governor
Mervyn King tells Dubai forum that Europe has bigger problems to contend with
Brexit is no "big deal for the rest of Europe,” the former governor of the Bank of England told an audience in Dubai on Wednesday.
Mervyn King was speaking at the Arab Strategy Forum where he described Britain’s handling of its withdrawal from the European Union as another example of “the political classes being unable to cope with the concerns of ordinary people”.
His comments came mere moments before it was announced that British Prime Minister Theresa May would face a motion of no-confidence over her handling of the Brexit negotiations.
Mr King insisted Britain’s vote in June 2016 to leave the EU was not high on the list of priorities for other countries across Europe, who faced significant problems of their own.
“It is impossible to predict what’s going to happen with Brexit,” said Mr King, who made his remarks during a panel discussion on the state of the world economy.
“The UK was not prepared for this and it’s another example of the political class being unable to cope with the demands of ordinary people.”
Mr King - who was Governor of the Bank of England from 2003 to 2013 - went on to say that Brexit was a political, rather than an economic issue.
The now life peer recently made headlines after referring to Mrs May's withdrawal arrangement as "incompetence of a high order". He argued that no coherent plan had ever been presented.
On Wednesday, Mr King said that despite this he maintained the Brexit controversy did not present a global risk.
“I don’t even think it’s a problem for the rest of Europe, they have bigger issues to face,” he said.
He argued those issues included the future look of the global economy and rising levels of national debt.
“We should be concerned about the level of global debt,” said Mr King.
“The world looks incapable of getting back to the higher interest rates of before 2008.
“The underlying cause of debt had previously been too much borrowing and spending. You just have to look at China, where they decided to build infrastructure projects to help their economy, but were incapable of paying back the loans on the infrastructure. There is no easy way out.”
Dr Nasser Saidi, a former Lebanese Minister of Economy and Trade, also warned of the real risk of near-term economic instability.
“There is a risk of a financial crisis in 2019 that makes a recession likely,” he said. “There is going to be an economic tightening.”
Dr Saidi said the GCC’s attempts to diversify the local economy away from oil had to be a priority for the region.
“The oil model is in the past and we have to embrace renewable energy sources," he said. "The days of hoping that oil will go back to $200 (Dh735) a barrel are long gone.
“We have the wind and the sun that we need in the GCC for renewable energies. There will come a day when we export the last barrel of oil and we have to be ready.”
Experts have predicted that a barrel of crude oil will average between $55-65 (Dh202-239) in 2019.
He said the GCC would do well to heed the advice of the International Monetary Fund, who have warned countries in the region that they “cannot keep doing what they are doing” when it came to relying on oil.
Dr Mahmoud Mohieldin, senior vice president of the World Bank Group, also warned that the fractured state of relations between the world’s leading countries could make 2019 more difficult than the fall-out from the 2008 crash.
“International co-operation is not in good shape which is going to create further problems,” he said.
He called for the region to embrace new methods to buffer its economy against any potential downturn next year.
“Artificial intelligence is an area we need to heavily invest in. Arab countries do not have an infrastructure of producing technology,” he said.
“We are huge consumers of technology but we are not producers.”
Updated: December 12, 2018 04:16 PM