City watchdog concern over no deal risks
THERE are a range of “cliff edge risks” facing the UK if it quits the EU without a Brexit deal, City watchdog, the Financial Conduct Authority has warned.
The publication of the FCA analysis followed doomsday analysis from the Bank of England which suggested the UK could face an 8pc fall in economic output in little over a year.
The analysis was also created at the request of MPs on the Treasury select committee ahead of the meaningful vote in parliament on Dec 11.
It warned that even before March 2019, protracted political uncertainty – without a transition period to 2020, as outlined in the Government’s Withdrawal Agreement could cause havoc.
It said that even the “execution of firm contingency plans [for no deal] could lead to market fragmentation and increase cross border risk”.
However, securing a transition period in which the FCA would have to work closely with regulatory authorities across the rest of the EU, presented major headaches for the City.
This was “because of the risk of the UK being subject to rules where the UK authorities have not played a role in the decision making”.
Andrew Bailey, head of the FCA expressed his concerns about the UK being a rule taker for any longer than strictly necessary in a letter to Nicky Morgan who chairs the Commons Treasury committee. Mr Bailey said that the FCA wanted “to conclude negotiations with agreement on the future relationship as soon as possible”.
John Liver of at EY said that there were significant differences between the UK’s approach as a regulator and EU counterparts.
Mr Liver added: “A common view across the authorities on these matters is a priority to avoid confusion, and should be of mutual interest.”
Andrew Bailey, head of the Financial Conduct Authority