A Brexit vote is likely to send the pound plummeting as pre-poll jitters are already hitting the housing market, the Bank of England has warned.
The intervention came as Mark Carney, the Bank's governor, insisted he had every right to comment on the economic impact of the UK's potential withdrawal from the European Union after being accused of breaking impartiality rules by Tory backbencher Bernard Jenkin, a leading Leave campaigner.
The Bank insisted it was "increasingly probable" a Leave vote in next week's referendum would sharply damage the value of sterling across international money markets.
Read more: Jim Sillars - Let's free ourselves from the EU and the deceit that surrounds it
Financial experts have warned uncertainty surrounding the outcome of the poll is already forcing consumers to put off "major economic decisions" and provoking a slowdown in house and car sales.
The Bank insisted the referendum remained the "largest immediate risk" facing financial markets as its Monetary Policy Committee decided to hold rates at the 0.5 per cent level they have been at since March 2009.
Earlier this week, Janet Yellen, who chairs the US Federal Reserve, admitted the possibility of Brexit was one factor in it keeping its interest rates on hold.
The latest foray by the Bank into the increasingly bitter referendum debate came after an angry war of words broke out between Mr Carney and the Essex Conservative MP.
Bank sources revealed the governor considered a letter from Mr Jenkin, stating that he had made his views on the referendum public despite strict impartiality “purdah” rules, to be a "political threat".
The Tory MP, who chairs the Commons Public Administration Committee, hit back by branding the governor's response as "very aggressive".
Read more: EU referendum - UK's internal stability is also at stake in Remain or Leave vote
In a strident response, Mr Carney said Mr Jenkin's letter contained "numerous and substantial misconceptions".
He also accused the Conservative backbencher of having a "fundamental misunderstanding" about the independence of the Bank.
The governor wrote: "All of the public comments that I, and other Bank officials, have made regarding issues related to the referendum have been limited to factors that affect the Bank's statutory responsibilities and have been entirely consistent with our remits."
But Mr Jenkin claimed Mr Carney's intervention in the referendum debate had gone "way beyond what a Bank governor would normally do in terms of making statements about rate setting and economic forecasts".
He told BBC Radio 4's Today show: "He's reacted very, very aggressively towards me.”
The backbencher said there was no doubt that the Bank chief’s recent appearance on the BBC’s Andrew Marr programme went “way beyond” what a governor would normally do in terms of making statements about rate setting and economic forecasts.
"I obviously misconstrued that because in my letter to him I said he had made his views clear that he wants the United Kingdom to stay in the European Union," added Mr Jenkin.
But Lord Darling, the Labour ex-chancellor, accused the Tory MP of engaging in a "blatant attempt to muzzle a respected independent voice".
He added: "It is very clear the Leave campaign doesn't want people to hear what the Bank has to say on the most critical issue facing our generation because they don't like its conclusions."
The row followed an earlier one when a statement was published by four senior Conservatives, including two former chancellors, Lords Lamont and Lawson, who attacked the Bank as well as the Treasury for "peddling phoney forecasts" to scare voters into choosing to remain in the EU.
The former chancellors together with ex-party leaders Iain Duncan Smith and Michael Howard poured scorn on warnings of economic disaster from the Stronger In campaign.
They hit out at pro-Remain Tories for their behaviour in the referendum debate, describing Chancellor George Osborne's threat this week of an emergency Budget in the event of Brexit as "ludicrous scaremongering born of desperation".
But David Cameron hit back, saying it was "deeply concerning" that senior Conservatives had criticised the "independent" Bank of England.
"We should listen to experts when they warn us of the dangers to our economy of leaving the European Union," declared the Prime Minister.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel