Former Bank of England chief Mervyn King has attacked the UK government's handling of Brexit negotiations, warning it may already be too late to put in place a credible plan for exit on its terms.
With UK prime minister Theresa May's meeting with European Commission president Jean-Claude Juncker in Brussels this week doing little to unblock stalled talks, business groups are growing increasingly nervous. The two sides have until March 2019 to finalise a deal on their future trading relationship, as well as the divorce terms.
"The big problem facing the UK is that the government doesn't seem to have a clear strategy it has enunciated," King told a Citigroup investment conference in Sydney. "I don't see why the other side would make concessions at this point except simply out of the goodness of their own heart,'' he said via video link from New York.
King, who served as Bank of England governor between 2003 and 2013, said he is concerned the government is placing too much weight on negotiating a transition plan when it isn’t clear what it would transition to. “It is more of a kick-the-can-down-the-road plan to put things off for a period,’’ he said.
His comments come after UK chancellor of the exchequer Philip Hammond last week raised the ire of supporters of Britain's departure from the European Union by saying he would only start spending money on preparations for a "no-deal" scenario at "the very last moment."
‘Strange Position’
Mr King described Hammond’s stance as a “a strange position,” saying the government’s first priority should be to focus on a “credible fallback plan that makes it clear to every other member country in the EU that we are capable of leaving in 2019.”
“It’s possible that it might be too late to put in place. Certainly you can’t put in place new arrangements for customs forms and so on, migration arrangements, in the space of a few months,” he said.
Mr King, who reiterated his view that the long-term economic costs of exiting the EU may not be as large as most economists fear, warned that without such a plan the UK risks being left with little choice but to accept whatever the EU is prepared to offer.
“It’s not very sensible for the UK to allow itself to be put in that position,” he said.
-(Bloomberg)
