Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of the impact that a disorderly Brexit could have on the UK financial services sector.

Leaving the EU with a deal remains the Government’s top priority. An Implementation Period is the most effective approach to ensuring a smooth and orderly exit from the EU. That is why it is so important that we are redoubling our efforts to reach a negotiated deal that Parliament can support.

The Bank of England’s Financial Policy Committee (FPC) has highlighted that if the UK leaves the EU without a negotiated agreement, there would be an increased risk of disruption to cross-border financial services between the UK and the EU.

However, as the FPC set out in the Financial Stability Report, the UK’s banking system is strong enough to continue to serve UK households and business even through a disorderly Brexit, in which there is no deal and no transition period. The Government is also doing the necessary work to make sure that we continue to have a stable and functioning financial services regime at the point of leaving the EU in any scenario and to minimise disruption for UK households and businesses. This includes ensuring we have a workable regulatory regime for financial services by day one, and providing transitional regimes for firms to ensure that any no deal cliff edge is smoothed. However, for customers of UK firms currently passporting into the EEA, the Government is unable to mitigate all the impacts of a no deal scenario unilaterally. We welcome the announcements that the EU and some individual member states have made to date, which indicate they will take steps to mitigate some of the risks. We stand ready to intensify our engagement and co-operation with EU institutions on preparedness for all scenarios, because it is in our mutual interest to lessen the risk of disruption to households and businesses, in both the UK and EU.