LONDON (Reuters) - If Britain left the European Union without securing full access to the single market, banks would probably move some businesses to the remainder of the bloc, Bank of England Governor Mark Carney said on Tuesday.
The impact of a “Brexit” on the City of London’s financial district would largely hinge on the basis of Britain’s trading relationship with the EU, Carney said.
Mutual recognition, whereby the EU and Britain accept each other’s rules, would have much less impact than “third country” recognition under which the EU only allows banks from non-EU countries to access the single market if they abide by similar rules.
Banks in Britain currently have a “passport” giving them unfettered access to all other 27 member states, a situation that mutual recognition under a Brexit could replicate.
“Fundamentally in its broadest terms, the question is what degree of mutual recognition would be accorded to the UK... and whether or not a mutual recognition framework could be negotiated that would as much as possible replicate the current passporting regime,” Carney said.
But negotiating mutual recognition with the EU would take a “very long time”, Carney said.
Asked if some financial services activities would move out of Britain if there was no mutual recognition, Carney said: “One would expect some activity to move, certainly there is a logic to that.”
“It would say a number of major institutions are contingency planning for that possibility,” Carney added.
Reporting by Huw Jones; editing by William Schomberg
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