LONDON — Bank of England Governor Mark Carney said that the UK is the “investment banker” of Europe and that Brexit would hit the continent’s capital flows.
Carney said that more than half the debt and equity provided to European companies is raised in the UK, “by firms based in the UK, quite often to investors in the UK.”
His comments have been taken as a firm response to those made by European Central Bank Chairman Mario Draghi earlier this week.
Draghi said that said the UK would “first and foremost” bear the economic costs of Brexit, speaking to members of the European Parliament on Monday.
The UK’s governor said that the finance provided by the City of London is “crucial for firms in the European real economy and it’s absolutely in the interests of the EU that there is an orderly transition and that there is continual access to those services,” he said.
Carney has pushed for a so-called transitional deal, whereby the UK keeps its membership of the EU’s single market for at least two years after the Brexit negotiations finish.
The transitional period would start after the two-year deadline of Article 50, which the UK must trigger to start the process of leaving the European Union. It’s also an idea that Prime Minister Theresa May seems keen to consider.
At the CBI conference last week, May said she would try to avoid a “cliff-edge” in the Brexit process, allowing some leeway for a deal to take longer than the two years set out in Article 50.