The Bank of England has expressed the need of firms with cross border activities between Britain and the EU to detail their contingency plans following Brexit. After the plans by the UK prime minister Theresa May to trigger Article 50 has come into practice. According to reports consumer confidence has fallen among Brexit supporters.
With European officials unhappy with the result of Brexit, according to CITY AM the Portuguese prime minister expresses the need for nationals to return, “We would like our people back from the UK. Growth is back and the qualified, educated, now English-speaking citizens that are kindly looked after for the last few years can come home”.
The statements like these are alarming for the skilled work force; a shortage in the labor force is currently issues with UK employers are increasingly struggling to fill jobs in shops, factories and hospitals according to reports. At the end of last year industry groups representing the major supermarkets and foods warned that EU workers provided” an essential reservoir of skilled, semi skilled and unskilled labor and without them food prices would rise.
The Bank of England have drawn up a plan to increase the level of activities in relation to Brexit, with businesses concerned whether they will still hold passporting rights that allow British based banks and insurers to work with the rest of EU after Brexit. The road seems not so rosy, with uncertainty still looming over Britain, on what exact plans does the Conservative party have, on fixing the failed planning on Britain’s smooth exit out of the fragile European union.
Sam Woods, the Bank of England’s deputy governor for prudential regulation and head of the Prudential Regulation Authority stated that, many firms are well advanced in their planning. However the planning is generally uneven across the market. The level of planning can be seen as a problem, as the market forces react to issues of uncertainty and thus lead to reduce forecasts for economic growth.
Mark Carney used the letter to warn politicians of denying access to Europe’s market, with a open financial system is beneficial to firms at home. Using protectionist politics can reduce foreign direct investment, which is dangerous for an economy, which relies on investment home and abroad. Carney followed on with “London is Europe’s investment banker” and that repair of the global crises was thanks to London going above the minimum global standards, making the UK a reliable financial and monetary system to invest in. Carney believes that the status of London is at risk thanks to uncertain plans.
He believes a deal needs to be in place between EU and the UK in order to trade, easier cash flows and reduce the jobs being moved out of London in order to benefit from Brexit. The main issue for the Conservatives is to ensure that banking affairs do not become complex with many jobs moving out of London in favor of an European union country, reducing the tax revenues received by the government and undermining the status of London as a financial powerhouse. A contingency plan is vital to maintain the stability of the pound and to remove any uncertainty of Britain’s future. One cannot imagine if plans are not made to avoid further drops to Britain financial future.