LONDON (Reuters) – Britain’s finance ministry and the Bank of England are at odds over how to regulate financial services in the City of London after Brexit, the Financial Times reported on Monday, citing unnamed officials.
Finance minister Philip Hammond favours an approach that would keep Britain close to the European Union after Britain leaves the bloc, but the central bank does not want to be left as a “rule-taker”, according to the report.
“It is very, very bad. The bank wants to have as much control as possible and doesn’t want to be a rule-taker,” the FT quoted one BoE official as saying. Another said there was a fear that the finance ministry “is going to give it all away”.
The Bank of England (BoE) declined to comment on the report.
The BoE and the finance ministry, known in Britain as the Treasury, had both backed “mutual recognition” as the basis of a deal in financial services, meaning close co-operation between regulators and financial policymakers would see British and EU regulations recognised by the other party.
However, the EU’s chief negotiator on Brexit Michel Barnier said last month the bloc’s existing system of market access for foreign financial firms could work well for Britain after it leaves the European Union, reducing the chances that Britain’s financial sector will get the bespoke deal that London is hoping for.
The search for a plan B has exposed the divisions between the BoE’s deputy governor for financial stability Jon Cunliffe and the Treasury on the issue, the FT said.
A spokesman for the Treasury said it was united with the Bank of England in aiming to ensure the stability and prosperity of the economy.
“We are working together to ensure that the UK continues to remain the pre-eminent financial services centre of the world,” the spokesman said. “We agree the United Kingdom cannot be an automatic rule-taker.”
(Reporting by Alistair Smout; editing by Andrew Roche)