The banking sector is sufficiently strong that it can withstand a ‘disorderly Brexit’ a leading figure at the Bank of England has claimed.
Martin Taylor, external member of the Bank of England’s Financial Policy Committee, said that stress tests on the banking sector had showed that it had sufficient reserves to cope with any downturn that may follow a failure between Britain and EU member states to agree a deal on trade.
Speaking exclusively to The Yorkshire Post, Mr Taylor, a former chief executive at Barclays, added that the economies of Northern cities were “transformed” and that the full extent of the success of the region was misunderstood by many in the South.
Mr Taylor said: “The difficulty for us in designing our stress test last year was predicated on the kind of economic shock that we thought would be encompassed by a Brexit that went wrong. That is not to describe the outcome, but just a disorderly failure to agree. We didn’t look at specifically through a Brexit lens, we looked at it through the lens of the Government has to pay a lot more for its money and you get a sharp economic downturn, a very sharp rise in unemployment and a big drop in real estate prices.
“The question for us was can the banking system survive and the answer is yes we think it can. It obviously would take a big hit but in terms of capital, they have got so much than they had, at least three times as much, than before the crisis.”
Mr Taylor, born in Lancashire and went to school in Keighley, said the apparent lack of progress in the Brexit talks was inevitable.
“We are at a time which is both difficult and in a sense not surprising because the way negotiations of this kind tend to work, particularly with the EU, means a lot of things go at the last minute.
“And because not everything is clear until late, there tends to be a period when you really don’t know as much as you ought to. I am very much hoping that the European council meetings coming up now and in three months time will give us a bit more clarity.”
Mr Taylor added that UK business remained amongst the most technologically advanced in the world.
“The British businesses I come into contact are as least as digitally savvy as any in the world, except for the US but that is something we can’t take for granted.
He added that the success of the English football team in the World Cup could affect the economy “probably more important one imagines” adding “these things really do matter”.