(Bloomberg) -- U.K. Chancellor of the Exchequer Philip Hammond said regulators could help soothe banks' nerves during Brexit once a transition deal for the U.K.'s withdrawal is agreed with the European Union at a summit this month.
Hammond said the European Commission, which is leading the divorce talks for the EU, and regulators on both sides of the Channel, can step in to reassure firms once the political deal on the transition is achieved. That summit deal won't be legally binding. As Hammond put it, the political agreement “won't be quite enough” to provide certainty.
“There will be a process to be gone through of parliamentary ratification” of the transition deal, he told reporters in London. “In the meantime, I think that there is a great deal that the commission itself can do, that regulators can do, to provide reassurance to businesses across the European Union, including here in London.”
Companies have said they need to have an idea of what the future relationship is going to be as they plan and invest for the post-Brexit world. It's particularly important for the U.K., because absent an agreement, firms have to plan for a worst-case scenario and many may decide to shift more of their business to the continent than would be necessary otherwise.
Read more: EU Warns That Brexit Transition Remains at Risk Until Talks End
Sam Woods, the U.K.'s top bank supervisor, has said U.K. regulators haven't yet decided what they'll tell the firms they oversee when a political transition deal is reached.
“The question will be the extent to which firms feel they can rely on that political agreement,” Woods said earlier this year. “There will be a question for us, which has not yet arisen but I guess will come to the PRC in due course, about what we would say at that point. That will be significant.” The PRC is the Bank of England's Prudential Regulation Committee.
To contact the reporter on this story: John Glover in London at johnglover@bloomberg.net.
To contact the editors responsible for this story: Patrick Henry at phenry8@bloomberg.net, Emma Ross-Thomas
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