Bank of England top official urges Brexit transition deal by Christmas
Deputy governor Sam Woods says slow progress in negotiations risks banks triggering contingency plans
Sam Woods, the deputy governor of the Bank of England. Credit: Jonathan Brady/PA
A Brexit transition deal must be reached by Christmas to reassure banks or risk them triggering contingency plans, the deputy governor of the Bank of England has warned.
In a stark intervention, Sam Woods said an implementation period must be agreed by the end of the year or high street banks may begin to shift their operations overseas, which would increase complexity and make them harder to regulate.
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Speaking at the annual Mansion House City banquet in London, Woods said: "If we get to Christmas and the negotiations have not reached any agreement on this topic, diminishing marginal returns will kick in.
"Contingency planning is a sliding scale of increased commitment, investment and momentum through time. It is much more prudent and prosaic than hovering over the relocate button or rushing to the exit door.”
He also reiterated a warning he made earlier this year that after Brexit the extra burden placed on the Prudential Regulation Authority, a body owned by the Bank of England that exercises statutory powers and regulates UK financial services, will make it harder to police the sector.
"I struggle to see an outcome in which banks and insurers do not get harder to supervise and harder to resolve for all involved," he added.
This comes as the Telegraph reveals a looming deadlock over the so called "Brexit divorce bill".
According to the newspaper Britain will refuse to tell Europe how much it is willing to pay to settle its debts as it prepares to leave the bloc.
A Whitehall source said: “There won’t be any political movement from the British side on the bill until the EU broadens its package to discuss transition and the future relationship.”
It follows Theresa May’s pledge in her recent Florence speech to "honour” Britain’s financial commitments to the EU.
The prime minister also stated that any transition period would take “about” two years.
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