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The Bank of England rejected newspaper reports on Sunday that the governor had been working on “secret” plans to keep Britain in the single market after leaving the EU and pointed to Mr Carney’s public support of transitional arrangements after the UK leaves.
Mr Carney’s position aligns himself with Theresa May, who spoke last week about the merits of avoiding a “cliff edge” departure from the EU.
There are, however, many possible forms of transitional arrangements for leaving the EU and the subject is highly sensitive in Downing Street because vocal supporters of Brexit have lined up against the idea. They fear a slow Brexit might lead to the UK remaining compliant with EU practices and procedures almost indefinitely.
Mr Carney has made the need for transitional arrangements to leave the EU clear in public and in private meetings. Speaking to MPs on the Treasury Committee this month, the governor insisted that his advocacy of a smooth “transition period” was not an attempt to frustrate the referendum decision.
“Just to be absolutely clear, what I mean by that is I am not talking about staying in the European Union,” he told MPs.
Speaking about the financial system, he said that in all trade deals he knew about there were transitional arrangements in which the new rules were phased in, and the shortest ever had been two years for the Swiss-EU insurance deal.
“When there is a financial reform it takes a period of time: the Basel reforms phased in over eight years. The Vickers reforms phased in over four to six years … Normally, it is in the range of four to seven years,” the governor said.
Mrs May also told the CBI last week that she recognised the need for a smooth Brexit. “People don’t want a cliff edge, they want to know with some certainty how things are going to go forward. That will be part of the work that we do in terms of the negotiation that we are undertaking with the European Union,” the prime minister said.
Downing Street hastily rowed back, however, from the inference that Mrs May was committed to a long transition period during which Britain keeps financial contributions to the EU, free movement of people and follows the rulings of the European Court of Justice. [...]
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