- Reuters/Gonzalo Fuentes
- Paul Marshall, cofounder of $34 billion UK hedge fund, Marshall Wace, accuses the Bank of England of anti-Brexit bias.
- The Old Lady of Threadneedle Street’s forecasts since the vote have been “so far adrift as to be embarrassing,” Marshall wrote in the Financial Times.
- Marshall was a major backer of the leave campaign during the run up to the referendum, and donated around £100,000 to the campaign.
LONDON – Paul Marshall, a cofounder of British hedge fund giant Marshall Wace, has accused the Bank of England of being excessively negative about Brexit, and by doing so, says the central bank is at risk of ruining its credibility.
Writing in the Financial Times on Wednesday, Marshall said that the bank’s persistently pessimistic forecasts about the negative economic impacts of the vote to leave the EU could now be considered to mark the beginnings of what he called a “systematic cognitive bias.”
“All of us have these types of biases and good economic forecasters are careful to be aware of their own prejudices,” Marshall wrote.
“Not so the Bank of England. It has now come to embody anti-Brexit cognitive bias to such a degree that it endangers its credibility as an institution.”
Marshall, it should be noted, was a major backer of the leave campaign during the run up to the referendum, and donated around £100,000 to the campaign.
The biggest point of criticism of the bank, Marshall wrote, centres around its August 2016 forecasts – the first set after the referendum.
“The bank’s forecasts were so far adrift as to be embarrassing. And because the Bank of England not only makes predictions but also sets monetary policy, poor forecasting can lead to poor policy,” Marshall, whose firm has assets under management of close to $34 billion.
“Those errant forecasts provided the rationale for last year’s emergency cut in interest rates and additional quantitative easing that were, with the benefit of hindsight, unnecessary.”
Marshall’s article resurfaces criticisms that were aggressively levelled at the bank soon after the referendum, when numerous leave backing politicians called for the resignation of Governor Mark Carney, over what they saw as Carney’s embodiment of the bank’s anti-Brexit biases.
In late 2016, Carney faced attacks from the likes of former Tory leader William Hague, failed Conservative party leadership candidate Michael Gove, and former chancellors Norman Lamont and Nigel Lawson.
Most of his critics at the time felt he was too supportive of the Remain campaign prior to the EU referendum, and had politicised a role that is supposed to be purely technocratic.