The Bank of England on Wednesday criticised the European Union for not clearly signalling its Brexit contingency plans for the financial sector.
The BoE’s Financial Policy Committee, tasked with safeguarding the financial system, however praised the UK government’s ‘progress’ on handling risks arising from Britain’s EU withdrawal, due on March 29 next year.
The regulator added in its biannual stability report that Britain’s EU (Withdrawal) Bill, alongside plans for a temporary permissions regime allowing post-Brexit cross-border financial trade, had dimmed those risks.
The BoE also hit out at the EU’s banking watchdog, which had Monday criticised UK-based financial firms’ Brexit contingency preparations.
Providing an overall disruption assessment, BoE governor Mark Carney said Wednesday: ‘The biggest remaining risks of disruption are areas where action is needed by both UK and EU authorities, such as ensuring the continuity of the £96 trillion ($127 trillion, 109 trillion euros) of existing derivative contracts.’ 
‘Based on our experience and knowledge of these markets, it will not be possible, ahead of March 29, for private financial institutions on their own to mitigate fully the risks of disruption to financial services.’
Fundamental issues
Carney added: ‘The EU has not yet indicated their solution to these fundamental issues which would be expected to have more material impacts on the costs and availability of finance on the continent in the unlikely event of a disorderly Brexit’.
The BoE remains anxious that firms may be unable to service trillions of pounds worth of cross-border financial services contracts – including for individuals’ pension and insurance products.
‘As yet the EU has not indicated a solution analogous to a temporary permissions regime,’ the report added.
‘EEA (European Economic Area) customers remain reliant on UK-based financial companies being able to overcome any future barriers to cross-border service provision.’
On Brexit preparations, it noted: ‘Progress has been made, but material risks remain.’
The report was published two days after the EU’s European Banking Authority (EBA) regulator warned that financial firms ‘must speed up’ contingency plans in case of a hard Brexit.
UK financial services lobby group TheCityUK was swift to dismiss those suggestions of inadequate plans.
Quizzed by reporters, Carney called the EBA’s stance ‘incomplete’, adding it ‘did not acknowledge the temporary permission regime which has been very clearly signalled by the (UK) government’.
Call for ‘urgent’ progress
Separately on Wednesday, European employers and trade unions joined forces to call for ‘urgent’ progress in slow-moving Brexit negotiations.
Bosses from UK employers’ group the Confederation of British Industry and the EU-wide BusinessEurope, as well as Britain’s Trades Union Congress and the European Trade Union Confederation (ETUC), issued their joint appeal on the eve of this week’s EU summit in Brussels. 
The groups, which together represent 45 million workers and 20 million employers across Europe, met in London earlier this month to discuss Brexit.
“We are calling on the UK government and the EU to inject pace and urgency in the negotiations, bringing about measurable progress, in particular a backstop arrangement to avoid a hard border in Ireland,’ they said in a statement.
They added: “The cost of disagreement between the UK and the EU would be dire for firms, workers and the communities where they live. Amid uncertain times, we appeal to negotiators on both sides to put jobs and prosperity before politics when seeking solutions that will matter for generations to come.”
There is growing concern that Britain could leave the EU without a deal, as tough negotiations stall in regards to the border between Northern Ireland in the UK and Ireland.