BoE believes that the UK could cope with hard Brexit, but former Prime Minister, Tony Blair disagrees
On Wednesday, Bank of England stated that Britain’s banks could deal with a hard Brexit expected next March if needed. As Reuters reported, the Financial Policy Committee of Bank of England stated that the Britain banks have sufficient capital to face any turbulence in the markets once Great Britain leaves the European Union without a deal. The committee is to review in March whether the current counter cyclical buffer should be raised due to other risks that build up over the course of a credit cycle, such as mortgages granted at high loan to income ratios.
The Financial Policy Committee (FPC) sees good progress made in ensuring that unsettled derivatives contracts do not impose risk to the British economy in case of no Brexit transition deal in place. Never the less, Britain and the EU should take action and determine the steps to be taken in case of hard Brexit to occur in terms of avoiding potential disruption to 29 trillion pounds of uncleared swap contracts.
However, former Prime Minister Tony Blair does not agree with the views of BoE and believes that the UK should commence planning to delay Brexit and extend the negotiations with the EU, as he sees leaving the European Union without a deal as a disaster. Additionally, he believes that Prime Minister, Theres May, does not have a set aim to follow towards the exit day in March 2019 and has shown slow progress of negotiations. At this moment, as per Reuters, May is still having difficulties to build a consensus with her cabinet and reach a decision on the customs and trade models to propose to the EU and has assured to provide a more detailed plan that is expected to be published next month. Before doing so, she must have the support of her most senior ministers.
After leaving the EU, Britain will need to re-invest itself as a global trading nation and British Chancellor of the Exchequer, Philip Hammond is looking to promote free and open trade in his recent talks with China. In his last visit, both countries promised to continue strengthening the cooperation on a wide range of financial, economic and trade issues and Britain’s aim is encourage two-way trade and investment with Beijing.
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