Tensions rise between BoE and treasury over possibility of bad Brexit
(30 May 2018 – UK) Tensions are high between the Bank of England and the Treasury as the risk of a bad Brexit deal for the City of London grows.
There are mounting fears that Brussels will reject plans put forward by the chancellor for maintaining European market access, with the Financial Times reporting that Bank officials are at loggerheads with the Treasury over a ‘Plan B’ arrangement.
The BoE fears it could be left as a “rule taker” should Britain agree to a new deal that maintains European market access for financial firms without giving the Bank sufficient control over City regulations in future. The concerns stem from the sprawling scale of the City as one of the biggest financial centres in the world.
The breakdown in relations comes as chancellor, Philip Hammond, strives to prevent an exodus of international banks for the City, having tried to reassure them in March that the UK would seek to maintain European market access after Brexit.
The EU however has loudly dismissed the UK government’s current proposal – which would see both London and Brussels accept mutual recognition of each other’s regulations covering the financial services sector.
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