Bank of England governor Andrew Bailey has told banks to step up preparations for Britain to leave the EU without a deal, according to Sky News sources.
The news comes as a report released by the independent Social Market Foundation found that manufacturing, banking and finance would be highly exposed to a double economic hit from measures to control coronavirus and leaving the EU without a trade deal.
It found that regions and local areas where there is a reliance on these exposed sectors for employment and economic vitality, such as London, the North West and Midlands, would see pockets of severe economic disruption if the transition period is not extended and Britain leaves the EU without a deal on 31st December 2020.
Commenting, Best for Britain CEO Naomi Smith said:
"This is very worrying. A number of key sectors are exposed to the double economic hit of coronavirus and a no-deal Brexit, as a new report by the Social Market Foundation has shown.
"Manufacturing, banking and finance will be particularly hard hit, while areas that rely on those sectors for their community's economic life will be badly damaged.
"The government must urgently assure businesses and communities that their ambition is still to achieve a comprehensive trade deal with Europe."
Social Market Foundation report
The Social Market Foundation (SMF) report was commissioned by cross-party group Best for Britain. It examines, in the context of ‘U-shaped’ recovery from a coronavirus induced recession, the economic impact of both a new Free Trade Agreement and leaving the European Union without a trade deal. It seeks to provide an understanding of which sectors, regions and local areas in the UK will be most exposed to both supply-side shocks. Its main findings include:
- If the UK leaves the EU without a deal in place on 31st December 2020, the manufacturing, banking, finance and insurance sectors would be severely exposed to a double economic hit from Brexit and coronavirus.
- While London and the South of England would be highly exposed to the double economic hit caused by Brexit and coronavirus under an FTA, leaving the EU without a deal in place would create pockets of severe disruption across the country, and particularly in the North West and Midlands regions. 50% of local areas (NUTS3) in the North West are placed in Category 5 (the highest) and a further 40% in Category 4 for their exposure to a double economic hit based on the gross value added of sectors locally.
- Analysis of local area impact based on employment shows there are 66 local areas in the most severe category of impact if the UK leaves the EU without a trade deal at the end of the year. One sixth of these areas have more than a third of their labour market working in either manufacturing or finance, banking and insurance etc. (the two industries most impacted). Four of the 66 areas have more than 100,000 jobs in these two industries.
The full report, ‘Assessing the economic implications of coronavirus and Brexit’, can be downloaded here.