- Reuters/Victoria Jones
- No reason a custom deal can’t be struck for the City of London, Bank of England governor says.
- Speaking to the Treasury Select Committee, Mark Carney said that he doesn’t “accept the argument that just because it has not been done in the past, it can’t be done in the future.”
LONDON – Bank of England Governor Mark Carney believes there is no reason that the City of London cannot be covered by any bespoke Brexit deal.
Speaking to the House of Commons’ Treasury Select Committee on Wednesday afternoon, Carney was asked about comments from the EU’s top Brexit negotiator Michel Barnier claiming that the UK’s financial services sector will not be included in any Brexit deal if the UK leaves the single market.
“There is no place [for financial services]. There is not a single trade agreement that is open to financial services. It doesn’t exist,” Barnier said in an interview earlier this week.
Barnier said the result would be a consequence of “the red lines that the British have chosen themselves. In leaving the single market, they lose the financial services passport.”
Carney disputes that approach, telling the TSC: “I don’t accept the argument that just because it has not been done in the past, it can’t be done in the future.”
“We’d just walk away from progress if that were the approach we took to issues,” Carney said appearing to take a swipe at Barnier’s comments.
“The UK financial system is, like it or not, is effectively the banker for Europe in the most complicated bits of finance, the wholesale markets, the equity underwriting, the derivatives, FX trading.There are substantial economies of scale that benefit both sides,” Carney told the committee.
“We have a system and a set of regulations that have been significantly, significantly improved over the course of the last decade, that means that we can operate that system, both responsibly and reliably.”
“From a trade perspective, if you’re going to have trade in services, we are now in a position where you can have free trade in financial services, or some form of cooperative arrangement in financial services,” Carney continued.
“That’s because you have very high common standards, you have high transparency about who implements them, and existing modes of supervisory cooperation.”
The future of the City of London and the wider UK financial sector has been up in the air since the Brexit vote, with fears about the loss of the so-called financial passport causing many overseas lenders to announce plans to set up new EU operations away from the UK.
The passport is a set of rules and regulations which allow UK-based finance firms to trade with and sell their services into Europe, and is tied strongly to membership of the European Single Market.