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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
     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:
[TOPICS: M$B$$$,M$E$$$,M$$BE$,MFB$$$,MGB$$$]

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