The head of the U.K. Financial Conduct Authority added urgency to Brexit negotiations by saying European governments must reach a transitional agreement for financial services by the end of March to avoid the risks presented by EU departure.
Financial contracts between the U.K. and E.U. worth up to a notional 26 trillion pounds ($36.4 trillion) — particularly those related to derivatives and insurance — may no longer be “serviceable” should an agreement not be in place, FCA Chief Executive Officer Andrew Bailey said Monday in a speech. He warned the effects would be felt in the EU as much as they would in the U.K.
“Like all systems, the U.K. financial system is exposed to risks,” Bailey said, according to an emailed copy of the speech at the Future of the City dinner in London. “Given its size, complexity, and global interconnectedness, if these risks were to materialize they could have a major impact not only on the U.K. but also on the global financial system. Financial stability in the U.K. is thus a global public good.”
British Prime Minister Theresa May is presiding over a Conservative party that is divided over how close the U.K. should remain to the EU following its departure, and she has remained vague about her preferred outcome as the March 2019 exit approaches.