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MPs ask Hammond and Carney for Brexit impact studies

Published 03/07/2018, 09:50
© Reuters. Britain's Chancellor of the Exchequer Philip Hammond listens to the Governor of the Bank of England Mark Carney's speech at the Annual Mansion House dinner in London

By Huw Jones

LONDON (Reuters) - Lawmakers have asked Chancellor Philip Hammond and Bank of England Governor Mark Carney to produce and publish analyses on the impact of Brexit ahead of a vote on the final divorce deal with the European Union.

The findings will fuel a battle between those who favour Britain staying close to the EU - seen as Hammond's preferred option - and Brexiteers who want a clean break with Brussels.

Parliament's Treasury Select Committee has written to Hammond, Carney, and Andrew Bailey, chief executive of the Financial Conduct Authority, in letters released to the media on Tuesday.

The committee wants the finance ministry to assess the long-term economic and fiscal impact of implementing the final divorce settlement once it has been negotiated, and of the impact of a no-deal Brexit whereby Britain crashes out of the bloc next March.

"Any estimates of potential future costs and benefits of aligning with the EU acquis (laws) as it changes should be assessed separately, and the assumptions about the future changes clearly described," the committee's chair, Nicky Morgan told Hammond.

"An assessment of winners and losers from the proposed changes, and the likely countervailing impact on access to EU markets, should also be produced."

There should also be a short-term economic analysis covering the five years from March next year.

Senior government ministers meet on Friday in an attempt to agree Britain's position in negotiations with Brussels on the future shape of UK-EU trade relations. A vote in parliament is expected in the autumn on the final deal Prime Minister Theresa May brings back from negotiations with Brussels.

The committee is asking the BoE to assess the impact of the divorce settlement and future relations on the central bank's ability to meet its objectives of monetary and financial stability.

Morgan told Carney that parliament's vote would raise many questions, including whether it is desirable for Britain to adhere to EU rules to secure financial services market access.

© Reuters. Britain's Chancellor of the Exchequer Philip Hammond listens to the Governor of the Bank of England Mark Carney's speech at the Annual Mansion House dinner in London

Morgan, who campaigned to stay in the EU in the 2016 referendum, is asking Bailey to assess the impact of the final EU divorce settlement and future trading framework on the FCA's ability to meet its objectives, such as protecting consumers.

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