The Conservative MP Nicky Morgan has asked the Bank of England to provide comprehensive details of the City’s readiness for a hard Brexit, in an early indication of the agenda she hopes to pursue as head of one of parliament’s most influential committees.
The newly elected chair of the Treasury select committee also called on the Bank to provide its views on what a Brexit transition deal should look like to minimise damage to the City. An analysis by the consultancy firm Oliver Wyman calculated that up to 40,000 jobs in the wholesale banking sector – which provides services to companies – could be at risk.
Morgan issued her request to Sam Woods, a deputy governor at the Bank, which had given hundreds of banks, insurers, fund managers and other major City firms a deadline of July 14 to demonstrate how they would cope with a hard Brexit.
Morgan told Woods that the committee – which is still being constituted and will not meet until the autumn – may want to consider the implications for financial services of the UK leaving the EU and that she wants him to provide the information, without providing specifics about each firm, by Wednesday.
Morgan said: “The cliff edge facing businesses in April 2019 is a cause for concern, particularly in the financial services sector. Based on the information the PRA [Prudential Regulation Authority] has collected, I have asked Sam Woods about how banks and insurers will respond as the Brexit deadline approaches, and the key risks of a ‘no deal’ scenario.
“I have also asked Mr Woods for his views on the desirability and design of a transitional arrangement with the EU, to provide more time to negotiate and prepare for a new UK-EU economic relationship. Getting these arrangements right will be crucial for ensuring that the City retains its pre-eminence as a global financial centre, and to protect the economy and jobs as the UK leaves the EU.”
The Bank had called on firms to spell out plans that would allow them to keep operating in the “most adverse potential outcomes” – a hard Brexit – as well as the UK leaving the EU without a trade agreement, no implementation period, no cooperation over regulation, and no “mutual recognition”, which allows products to be sold cross-border.
