Carney: Britain’s leading role after Brexit

Bank Governor highlights the opportunity for more jobs and higher growth across the world

THE UK is in prime position to lead a new era of globalisation after Brexit, according to Mark Carney, who also warned that cutting off international finance risked inflicting damage on the economy. In his first speech since Article 50 was triggered, the Governor of the Bank of England said the global sys- tem was “at a fork in the road” as he urged politicians to take the “high road” towards prosperity built on “resilient” and “responsible” rules.

Mr Carney said “all the building blocks” were in place to create “a system of enhanced access” for Britain on a “wide range of financial services” after it leaves the EU to ensure minimal disruption as the UK forges a new trading relationship with the bloc.

It came as the Bank’s Prudential Regulation Authority published a letter sent to finance bosses across Britain conducting cross-border business in the rest of the EU asking them to hand over their Brexit contingency plans.

Sam Woods, chief executive of the PRA, said while most firms’ plans were “well advanced”, they remained uneven, particularly related to the possibility of a hard Brexit.

Speaking in London, Mr Carney said Brexit negotiations that built “on the foundations of a new responsible global financial system” would ensure the UK and rest of the world remained open for business.

As long as this was done safely and countries recognised and trusted each others’ rules, he said “wholesale financial services could be brought more fully into bilateral trade agreements, keeping the global financial system open and resilient, and supporting greater trade, investment and innovation.” Mr Carney noted that this matched the Government’s aim to create a more global, trading nation.

“This road leads to more jobs, higher sustainable growth and better risk management across the G20.”

Traditionally, trade deals only cover goods but a deal between the UK and EU could set up a framework for including services too, which would be useful for Britain’s highly services-orientated economy. But that opportunity could be lost if Brexit talks turn hostile, he warned.

“There is another path – the low road – where trust and co-operation diminish, fragmentation hardens, capital flows are disrupted, and trade and innovation are curtailed,” the Governor said. “Taking the low road would be a suboptimal for all with fewer jobs, lower growth and higher domestic risks.”

Mr Carney, who is also head of the Financial Stability Board, said the UK was “ideally positioned” to take his “high road” because it starts with the same financial rules as the EU.

He said that it was important that businesses prepared “for all eventual outcomes”, even as he stressed that a good deal was in sight.