LONDON (Reuters) - Bank of England Governor Mark Carney and other top officials from the central bank were speaking about a BoE report on the potential economic impact of Brexit in Britain’s parliament on Tuesday.
Below is a selection of their comments to the Treasury Committee.
“The fall (in sterling) since the referendum represents the market’s view on a range of possible outcomes. And essentially the larger the effect on UK trade, the UK exit, the further the sterling is likely to fall, for various reasons. So at the moment what is ‘priced in’ to the level of the exchange rate is a number of possible outcomes.
“So if the eventual exit is towards the better end of that range, you would expect sterling to rise from here, if it’s towards the worse end of that range, you would expect it to fall further. And generally, the greater the economic dislocation, the worse the exchange rate is going to be, there’s a direct relationship.”
“We would be uncomfortable not having some flexibility to ensure that it (the UK’s financial sector) is appropriately regulated and appropriately supervised. We would not be comfortable...outsourcing supervision of this incredibly complex, incredibly important financial sector.”
“There’s no exam crisis. We didn’t just stay up all night and write a letter to the Treasury Committee. You asked for something that we had, and we brought it, and we gave it to you.”
“I think our financial sector is about 20 times bigger than Norway’s. It’s much more connected internationally, it’s much more complex. So in terms of just how the EEA works, and my understanding of the EEA de facto if not de jure EU laws are adopted by the EEA countries and written into the EEA annex and have force of law policed by the ECJ, that scenario, I think for a financial sector this large, this complicated, would be as governor says, quite uncomfortable.”
“The risk of being a rule taker goes up big time as per Mr Woods’s earlier comments. From a financial perspective, from a financial stability perspective, it’s highly undesirable to be a rule taker and to lose supervisory autonomy for any considerable length of time.”
DEPUTY GOVERNOR SAM WOODS ON BREXIT IMPACT ON FINANCIAL SECTOR JOBS
“The number of jobs that we expect to move indeed are moving from the UK into the EU27 at day one, i.e. end of March, for banks and insurance companies is something a little bit south of 5000, you might say around 4,000. That’s a pretty small number in the context of those sectors overall. You can think of the banking and insurance sector employing half a million people, or the ‘city’ as employing 400,000 people, or a million financial services jobs in the UK, as a whole.”
“The question is, where does that go from there? It is likely to be the case that number increases somewhat in a benign scenario. In a more extreme scenario, I think the way to think about it is through revenues, and as Mark said, we haven’t attempted to model that in very precise way, but as an outer bound, if you like, you could think of 200 billion in financial services revenues in the UK, of which around 40 billion come from EU27 customers, of which perhaps around half or something less than 20 billion, relies on passporting. Now if you map that across, which Oliver Wyman did a number of years ago, into a jobs number, and include all the other bits around the ecosystem, or something like that, they came to the number of 75,000 jobs. That, I would say is an upper end, not least because there are other ways in which firms can trade across the border.”
“At this point in time the ports are not ready for a move to an administered WTO relationship. So what do I mean by administered? I mean we move to a WTO relationship and there are the customs checks that are consistent with that on both sides of the borders.”
“We’re already sleeping soundly at night, because we have the financial sector, the core of the financial sector, in a position that it needs to be for a tough scenario.”
Reporting by UK bureau