Tony Ward is chief executive of Clayton Euro Risk
So we’re back to Brexit, then.
The Sunday Times reported that Mark Carney is working on a secret plan to keep British businesses in the single market for at least two years after the country leaves the EU in order to cushion the impact. Last week, the Governor of the Bank of England stepped up his efforts to get support for his plan, which could mean companies continue to operate under current trading rules until 2021.
Mr Carney held a series of private meetings with bankers and business leaders, imploring them to demand that Britain has single market access after Britain leaves the EU in 2019. The Governor is reportedly calling for what has been termed a ‘Brexit buffer’, in which access to the single market is retained for two years while a longer-term exit is agreed. The aim of this is to shield businesses from an immediate exit, but could also mean the UK continuing to adhere to EU rules, including possibly freedom of movement, even after Brexit. He has appealed to business leaders to set aside their differences over Brexit and focus on common goal.
Mark Carney is calling for bosses to demand a period of continuity after the Brexit negotiations conclude, in order to prepare for the terms of whatever deal the government can strike in Brussels – whatever that may end up looking like. The proposal would allow the government to offer a degree of comfort without revealing its broader strategy. According to senior bankers, the Governor is making similar appeals for a smooth transition in Europe, via the G20’s Financial Stability Board.
For what it’s worth, I think this is a good thing to do. Of course Mr Carney’s critics will argue that this is political interference and an attempt to water down Brexit, but to me it seems a practical approach. Whether or not the UK remains in the single market over the longer term, it’s pretty obvious that business needs time to adapt to the new arrangements and this is something Mr Carney has argued. It would also cushion the financial sector, and broader economy, from post-Brexit turbulence.
For me this is so important. I’ve mentioned this before but I am concerned that presently there is a lack of a coherent policy around Brexit. While I appreciate that this may be a negotiating ploy, there is certainly a fear that it may be a sign that as yet no concrete plans are in place.
I truly hope that reports that Prime Minister Theresa May is not ruling out a transition deal that would avoid a ‘cliff edge’ for British businesses are correct.
Mr Carney has floated the idea of a transition agreement, saying financial regulation requires years to create.What he is advocating makes perfect sense to me.