Britain’s finance minister urged the European Commission to help devise European contingency plans for the financial sector in case of no deal on Brexit, pointing to growing concerns about a disorderly departure from the European Union.
Philip Hammond made his plea at the beginning of this month at a meeting of EU finance ministers in Vienna, according to an EU official with direct knowledge of the matter.
He called on the Commission to engage on preparing plans that could reduce or avoid disruption to the financial sector in case of a ‘hard’ Brexit.
European Union leaders warned Prime Minister Theresa May on Thursday that if she did not give ground on negotiations over trade and the Irish border by November, they are ready to cope with Britain crashing out of the bloc.
Hammond was most concerned that, in the event of a no-deal Brexit, financial contracts could be rendered invalid. Although he insisted Britain was still committed to reaching a deal, he acknowledged the risks of there being no agreement before March, the source said.
A spokesman for the British treasury said following the Reuters report: “During the discussion on financial stability with fellow EU finance ministers, the Chancellor stressed the need for the UK and EU to work together to mitigate the risks posed by a disorderly Brexit.”
EU financial services commissioner Valdis Dombrovskis said at that meeting that work was under way to address “possible” problems, according to the EU official. But he played down Hammond’s concerns about the continuity of financial contracts, saying he expected limited problems.
The argument mirrored an earlier clash between the Commission and the Bank of England over contingency planning.
Brussels is saying it is up to supervisors and firms to adapt to Brexit.
The Bank of England has called this approach “impractical” and said 82 billion pounds ($109 billion) of insurance liabilities involving 48 million policyholders could be disrupted across Britain and the European Economic Area.
Derivatives worth a notional 26 trillion pounds are also likely to be affected by Brexit.
British Prime Minister Theresa May promised fresh plans to break the stalemate in Brexit negotiations after European Union leaders bluntly rejected her blueprint and warned that time is running out for striking a deal.
A two-day summit in Salzburg, Austria, broke up without progress, and leaders piled more pressure on May to shift her stance. They said a special November summit to sign the divorce agreement will only go ahead if the U.K. makes more concessions next month.
French President Emmanuel Macron angrily denounced those British politicians who campaigned for Brexit promising a better future as “liars” and warned that the U.K. will suffer consequences from its decision to abandon the EU. “Brexit shows us one thing: it’s not that easy to exit European Union,” Macron said. “It’s not costless, it’s not without consequences.”