MNI Policy: Hammond: BOE Carney Extension Helps If No EU Deal

By David Robinson

     LONDON (MNI) - UK Chancellor of the Exchequer Philip Hammond appeared

before the House of Lords Economic Affairs Committee, telling them that the

extension of Bank of England Governor Mark Carney's term was insurance against

any failure to reach a Brexit deal.

     Here are key points from his comments:

     - Carney will stay until January 2020, rather than June 2019 as he

previously said. You "could expect a period of some turbulence" if there was no

deal by the time the UK leaves the EU in March 2019, and a governor who was

leaving in June would have been poorly placed to deal with this, Hammond said.

     - The Brexit process is playing havoc with the normal functioning of the

Treasury. Hammond said he could not tell the Lords when the Autumn budget would

be or offer any reassurance about whether the Office for Budget Responsibility

would be able to prepare its forecasts on its normal timetable.

     Hammond cited speculation about "a special European Council in November" to

address Brexit, which would complicate the Budget timetable.

     - A deal with the EU over the UK's Withdrawal Agreement was do-able in six

to eight weeks, as chief EU negotiator Michel Barnier has said, according to the

chancellor.

     Past precedent shows the EU can move rapidly when up against a deadline and

this period is lengthy enough, Hammond said.

     - Hammond's caveat was that what will be negotiated by March would only

contain the outlines of the future economic partnership between the UK and the

EU. Any deal would probably be the equivalent of businesses agreeing "heads of

terms" and "not a detailed text."

     The Chancellor said that there was no enough time for a detailed agreement,

but it had to have enough in it to satisfy both the UK and EU parliaments.

     - From Hammond's point of view the way forward on Brexit is clear. Agree

the Withdrawal Agreement with a transition period through to December 2020.

     The deal could be signed off in November with details thrashed out later.

The crux from the UK side is whether parliamentary arithmetic will support this

plan, with any outline future partnership sure to generate opposition.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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