The Bank of England is looking at “a number of outcomes” including a no-deal Brexit scenario, following reports Governor Andrew Bailey has told banks and lenders to prepare for the transition period to end without agreement.
Mr Bailey said during a call with bank chief executives that they should accelerate planning for the outcome, according to Sky News.
The central bank said: “It is fundamental to the Bank of England’s remit that it prepares the UK financial system for all risks that it might face.
“In performing that role, the Governor meets the leadership of UK banks on a very regular basis.
“As we have said previously, the possibility that negotiations between the UK and EU over a future trading relationship might not conclude in a deal is one of a number of outcomes that UK banks need to prepare for over the coming months.”
Repeatedly ruled out extension
Most banks had already made preparations for a no-deal Brexit when the original deadline of October 31 for a deal came and went, before passing by the end of the year.
The Government has repeatedly ruled out seeking an extension to the transition period, with any request for a one-year or two-year extension needing to be formally lodged by the end of this month.
The talks are continuing until the end of Friday, although arguments remain over fishing rights.
A separate report by The Times said the UK and EU were preparing to give ground to try and revive the trade talks.
Trade barriers
Prior to becoming Governor, Mr Bailey told MPs that an outcome that sees the UK trade on World Trade Organisation tariffs would increase trade barriers and make it more expensive.
The latest comments came as Nissan repeated its insistence that the car maker’s Sunderland plant would “not be sustainable” unless a trade deal was reached.
Sky News reported that executives from Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland, the taxpayer-backed lender, spoke with Mr Bailey.
By contrast, Chancellor Rishi Sunak has been talking to bank chief executives on a one-on-one basis to avoid leaks.
Related: Johnson says he is ‘proud of our record’ on coronavirus