Carney’s punchy nuggets: BoE chief on the EU, and why UK productivity is not harmed by foreign workers

Bank of England chief executive Mark Carney has said that cheap foreign Labour is not harming Britain’s productivity, in fact the reverse.

He also warned that the EU referendum was stoking business uncertainty, and said a referendum should happen swiftly.

Productivity puzzle

In a broad ranging interview with John Humphries on the Today Programme, Carney said he wanted to “really dampen down” the idea that migrant workers were part of the productivity puzzle impacting the economy.

He said: “There has been a huge growth in employment, one of the strongest job markets in the world, and we have seen a big increase in the willingness of the British people, British nationals, to work.

“In the course of the last two years, the number of older workers, people in their 50s and 60s, who stayed in the labour market, has been more than 300,000 more than we would have seen in previous times. In addition, people want to work more hours. That’s another 200,000 to 300,000 more workers, effectively more workers.

“Compare that to the increase in net migration – the increase in the number of people coming to these shores – the first two numbers I just gave you total up to more than 500,000, the increase in net migration over that same period in the last two years is 50,000.

“The real story here is that British people have wanted to work more and what’s happened with the economy – and now I’ll get to productivity – is that jobs have been created, people are getting those jobs, now that spare capacity is being used up.

“As you saw yesterday the unemployment rate is down to 5.5%, we’ve created 200,000 jobs in the last three months alone – so that spare capacity is being used up and now for the economy to move forward it’s going to be a story of productivity. 

“[Foreign workers] contribute to that increase in productivity,” he added. “That is something we see across the economy.”

EU concerns

Carney also said that the government’s promised EU referendum was a source of concern for businesses, and that uncertainty on membership could damage investment.

On this issue he said he would prefer to see a referendum sooner rather than later.

He said: “[The EU] is the largest economy in the world. It’s our largest investment destination. It’s the largest investor in the United Kingdom.

“The government has made it clear that it is a priority. I am sure the government will act with appropriate speed in developing the negotiations … as soon as necessary.”

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