City watch­dog con­cern over no deal risks

The Daily Telegraph - Business - - Front Page - By Anna Isaac

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

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