Hammond in Bank of England Brexit row

PHILIP HAMMOND has been accused by one of the Bank of England’s most senior figures of pursuing a Brexit deal that would leave the Bank as a “rule taker” from Brussels.

Sir Jon Cunliffe, one of the Bank’s deputy governors, fears that the Treasury is “going to give it all away” when it comes to City regulation post-brexit, it is claimed.

Relations between the Treasury and the Bank are said to be “very, very bad” as a result of the growing distrust. It came as Theresa May was accused of damaging the chances of a successful Brexit by refusing to allow ministers to talk about preparations for “no deal”. Government sources have told The Daily Telegraph that more than 300 separate projects are under way to plan for a no-deal Brexit, but ministers have effectively been gagged because officials fear it would “wind up” the EU.

Nicola Sturgeon, the Scottish First Minister, said Theresa May was “not listening to anyone but mad Brexiteers”, naming Boris Johnson, Michael Gove and Jacob Rees-mogg. The Chan- cellor, who is one of the most passion- ate Europhiles in the Cabinet, wants to keep Britain close to EU financial regulations to give the City the best possible access to the European market after Brexit, but the Bank fears a compromise that would leave it as a “rule taker”.

Relations soured after Michel Barnier, the EU’S chief Brexit negotiator, refused to accept a “mutual recognition plan” that would have given the

Bank of England the regulatory independence it wants.

The Bank now suspects that Mr Hammond is willing to accept a deal that would give Brussels a significant say over future regulation of the City.

According to The Financial Times, Mr Cunliffe, the Bank of England’s deputy governor for financial stability, has fallen out with the Treasury because

‘There’s a wilful refusal on the part of Brexiteers to accept what’s staring people in the face’

“the fear is that the Treasury is going to give it all away”.

A spokesman for the Treasury said it and the Bank were “united in our aim to ensure the stability and prosperity of our economy, and we are working together to ensure that the UK continues to remain the pre-eminent financial services centre of the world”.

The issue of preparation for “no deal” also caused friction yesterday, with one former Brexit minister suggesting Mrs May must do more to explain the preparations being taken.

David Jones said: “No-deal preparation has been going on for a long time, and I think it would be helpful now for the Government to make it absolutely clear that this work is being carried out, both for a domestic audience and to show the EU we are not bluffing.”

One Cabinet source, however, cast doubt on whether enough work had been done for no deal.

The source said: “The fear among many senior Brexiteers is that we are in no way going to be ready if we end up crashing out without a deal.

“We are staggeringly far behind where we should be.”

Ms Sturgeon met Mr Barnier yesterday and immediately left herself open to accusations that she was trying to undermine the Brexit negotiations in order to push her own agenda for Scottish independence.

The First Minister said that remaining in the customs union and single market would prevent the return of a hard border in Northern Ireland, and she said there was a “wilful refusal” on the part of Brexiteers to accept what was “staring people in the face”.