Mark Carney accuses Michel Barnier of 'walking away from progress' over attitude to City of London

Posted On: 
20th December 2017

The head of the Bank of England has hit out at Michel Barnier for suggesting there would not be a free trade deal for the City of London after Brexit. 

Mark Carney appearing before the Treasury select committee this afternoon
Parliament TV

In a clear attack on the chief EU negotiator, Mark Carney said that ruling out a deal on financial services was tantamount to “walking away from progress”.

And he warned European leaders of the potential fallout from an agreement which marginalises the City, which he said remains the “banker for Europe” in a range of key areas.

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His comments came after Mr Barnier said yesterday that there was “not a single trade agreement that is open to financial services”.

In a move that may inflame tensions between the UK and Brussels, Mr Carney appeared to suggest Mr Barnier did not necessarily speak for the 27 EU member states.

“My understanding of the process is the negotiating mandate is set by the European Council, not by the Commission,” he told MPs on the Treasury Select Committee.

And he made clear his view that a deal that does involve the City would be good for both sides in the talks.

“The UK financial system, like it or not is effectively the banker for Europe in the most complicated bits of finance, the wholesale markets, the equity underwriting, the derivatives, the FX trade.

“There are substantial economies of scale and scope that benefit both sides.“

And he expressed optimism about the prospects for aligning the British and European banking sectors.

“From a trade perspective financial services have all the components – if you’re going to have a trade in services, financial services are now in a position where you can free trade in financial services or some form of cooperative arrangement in financial services.

“You have very high common standards, high transparency about who implements them, you have existing modes of supervisory cooperation, all that exists, and what you have to do is build the dispute settlement mechanism on top of that.

“I don’t accept the argument that just because it hasn’t been done in the past it can’t be done in the future. We’d just walk away from progress if that was the approach we took to issues.”