Plans drawn up for no-deal Brexit
TRADE: The Bank of England is drawing up contingency plans for a no-deal Brexit as major car manufacturer Nissan warned it will quit the UK if negotiations falter.
Governor Andrew Bailey has reportedly told banks and lenders to prepare for the transition period to end without agreement.
THE BANK of England is drawing up contingency plans for a no-deal Brexit scenario as one of the world’s biggest car manufacturers warned it will be unable to maintain its UK production lines if trade negotiations falter.
Governor Andrew Bailey has reportedly told banks and lenders to prepare for the transition period to end without agreement.
Mr Bailey said, during a call with bank chief executives, that they should accelerate planning for the outcome, according to reports.
Meanwhile, car giant Nissan warned it will not be able to sustain operations at its Sunderland manufacturing plant if Brexit negotiations fail to establish a trade deal.
A spokesman for the Bank of England said: “It is fundamental to the Bank of England’s remit that it prepares the UK financial system for all risks that it might face. In performing that role, the Governor meets the leadership of UK banks on a very regular basis.
“As we have said previously, the possibility that negotiations between the UK and EU over a future trading relationship might not conclude in a deal is one of a number of outcomes that UK banks need to prepare for over the coming months.”
The 7,000 workers of the UK’s largest car manufacturing plant rejoiced last week after surviving a global cost-cutting restructuring that saw the closure of the Japanese firm’s Barcelona facility.
A Nissan spokesman said at the time that Sunderland remained an “important part of our plans for the European business”.
But in an interview with the BBC, Nissan’s global chief operating officer, Ashwani Gupta, warned the firm would not be able to stand by its commitment to the Sunderland plant if the UK left the European Union without a trade deal that enabled tarifffree access to the bloc.
Mr Gupta said: “You know we are the number one carmaker in the UK and we want to continue. We are committed. Having said that, if we are not getting the current tariffs, it’s not our intention but the business will not be sustainable. That’s what everybody has to understand.”
In response to the concerns raised by Nissan, Downing Street stressed that it remained committed to reaching a deal with Brussels which would result in no tariffs or quotas on cross-border trade.
“We will continue to work hard to reach an agreement, for as long as there is a constructive process ongoing,” the Prime Minister’s official spokesman said.
“Our aim is zero tariffs and zero quotas – that is at least as much in the EU’s interest as ours and the EU has come close to reaching this aim in their other free trade agreements.”
But Prime Minister Boris Johnson has been adamant he will not seek any extension to the current Brexit transition period which ends on December 31, despite warnings the coronavirus outbreak means it will be impossible to conclude a new free trade agreement with the EU by that date.
Most banks had already made preparations for a no-deal Brexit when the original deadline of October 31 for a deal came and went, before passing by the end of the year.
The talks are continuing until the end of tomorrow, although arguments remain over fishing rights. A separate report by The Times newspaper said the UK and EU were preparing to give ground to try to revive the trade talks.
Prior to becoming Governor, Mr Bailey told MPs that an outcome that sees the UK trade on World Trade Organisation tariffs would increase trade barriers and make it more expensive.
Fundamental to the Bank’s remit that it prepares the system for all risks.
Spokesman for the Bank of England.