Mark Carney is the EU's new champion

If Osborne and Cameron wanted support from a trusted official for their overall stance on Europe in advance of the promised referendum they couldn't have expected more from Mark Carney this week. The Canadian Bank of England Governor's speech in Oxford at St Peter's where the ex-controller of BBC Radio 4, Mark Damazer is now Master was bound to attract a lot of attention. Carney has not been afraid to comment on controversial topics before—or introduce novel concepts such as his “forward guidance” on likely interest rate trends which was out of date before it was even issued. Or veering into the quagmire of the climate change debate, recently announcing that this would prove the most serious risk challenge for the financial sector in the future. Then, he was attacked for going too far off-piste. In this instance though his concerns were very much the ones you would expect from a central bank governor. How to ensure that his ability to continue to meet his remit of stability and low inflation could be maintained without causing a huge upset to the economy.

Carney was revealing a study on Europe under Sir John Cuncliffe, one of his deputy governors who had in the past served various masters including Gordon Brown and had himself spent a spell as UK's representative in Brussels. There is no way of course that any Bank economist could have disputed the benefits to the UK of being in the EU so far. The opening of trade has improved the efficiency of production Even Tim Congdon, researching for UKIP had conceded that trade liberalisation as a result of the single market had facilitated more productive use of resources in the UK. Carney repeatedly reinforced that view in his speech.

We know that companies that export tend to be more productive, but this is also the case in areas where there is competition from imports. So openness and trade are a good thing. As Cameron himself has been pointing out, prices for a variety of consumer products, such as air travel and mobile calls have fallen sharply as a result of liberalisation and actions by the competition authorities in Brussels. And much of the regulation that businesses complain about would have been imposed anyway, though possibly slightly differently. Flexibility of course, as Carney stressed, is important as the eurozone integrates further and that echoes Cameron' oratory too. Interestingly the flexibility we have seen exercised by the authorities here has been making it tougher for UK-based banks. Osborne may not have got his way on bonuses but the UK has in fact been tougher on capital requirements, on mortgage and general credit controls. And the UK is moving ahead of the rest of the EU in separating retail and investment banking.

His overall message was that the EU has been good for the UK in encouraging better productivity and growth. Further integration in his view needed to clearly ensure that the UK's interests would be preserved as the Banking union and capital union move forward. He was careful not to move outside that area this time but he did go out of his way to emphasise, repeatedly, that openness in goods, services capital and labour were what had been bringing about the benefits to the UK.

His argument is that openness is generally good for stability. He called the UK "an open economy par excellence… a bet that has paid off handsomely." There has been more capacity in the economy to grow without inflation.

You can imply from that in his view any changes which severely reduce the freedom of movement of labour might lead to more inflation pressures in the labour market and higher interest—and eventually less growth than would otherwise be the case.

Obviously this has implications for Cameron's objective in seeking to reduce migration by preventing EU migrants from claiming benefits possibly for as long as four years. In reality of course most migration from the EU is not done to claim benefits, in fact only 7 per cent of migrants claim out of work benefits. It is not at all clear that these changes would make a big difference on actual numbers as on balance most EU migrants come here to work and in fact contribute to the Exchequer rather than detract. But Carney's point is still valid, as perceptions about the UK's openness would be bound to have a detrimental impact that would upset the system's capacity to allocate resources to the benefit of UK producers and consumers.