Bank of England (BoE) new recruit Elisabeth Stheeman, has talked to MPs about the need for more clarity on Brexit so that financial organisations can plan for the future.
Stheeman who is an expert on commercial property and part of the BoE’s Financial Policy Committee (FPC), met with MPs just before her appointment to the FPC. She was asked about the risks she saw post-Brexit, and stressed that the government should provide a definite outline of the future relationship with the European Union before the end of the current financial year. She said:
“It is very important to create some kind of certainty for firms because otherwise they may be pushed into taking decisions.”
Stheeman feared that some financial firms would move their operations from London to Europe. She also wanted information on derivatives and insurance contracts. Currently, there is £20 trillion held in derivative contracts between UK and EU states.
Insurance policies for UK assets taken out by UK individuals and firms with EU insurance companies could be affected by Brexit negotiations.
A disorganised Brexit could affect individuals and companies that have taken out financial products with EU companies, such as commercial mortgages, insurance and bridging finance. Insurance on property or to protect mortgage payments could be at risk too should a deal on contracts between the UK and the EU fail to be reached.
Stheeman also warned of threats outside the EU from countries such as China that have rising debt, noting that they could affect UK financial stability.