Newspaper article The Evening Standard (London, England)

Don't Flee City over Brexit, Carney Tells Finance Firms; BANK CHIEF REJECTS MAY'S ATTACK ON LOW INTEREST RATES

Newspaper article The Evening Standard (London, England)

Don't Flee City over Brexit, Carney Tells Finance Firms; BANK CHIEF REJECTS MAY'S ATTACK ON LOW INTEREST RATES

Article excerpt

Byline: Nicholas Cecil and Joe Murphy

BANK of England governor Mark Carney today urged financial firms to hold their nerves in coming months and not flee the City over Brexit fears.

He also piled pressure on the Government to seek a transition period after a Brexit deal is agreed, possibly in 2019, to allow companies to adjust to the realities of being outside the EU.

In a comment likely to be seen as a swipe at Theresa May, Mr Carney also said that people who blamed low interest rates set by central banks for spreading inequality were engaged in a "massive deflection exercise".

Many firms, including in the Square Mile, had been making contingency plans for once Britain splits away, Mr Carney told MPs. However, he added that it would be jumping the gun for most firms to start moving staff overseas.

"I would stress to those firms, 'It's very early days.' So planning makes sense, action in most cases, I would say in general, is precipitous," he said in evidence to the Commons Treasury committee.

He emphasised that Article 50, which would start the two-year process of leaving the EU, had not been triggered, that the Government had not laid out its negotiating objectives, nor had there been "any sense" of whether there would be a transition period after the deal was reached.

He said that major financial reforms were often phased in over many years, with the shortest period for a trade deal that he had seen being two years for a Swiss-EU agreement on insurance.

He said such deals usually took four to seven years. "If that is part of the agreement, or the intent, which I would stress would be in the interest of those remaining in the European Union, not least in the financial sector," he said.

"Then that really informs what businesses need to do today or six months from now because you transition, you restructure during that restructuring window. You don't need to do it in advance in anticipation of what agreement the Government ends up striking. …

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