Mark Carney, the governor of the Bank of England (BoE), believes the UK’s financial sector could double in size within the next 25 years.
In comments made to the Guardian on 10 July and published yesterday, Carney said the City could prosper after Brexit to reach a size 20 times as big as GDP.
Carney said: “If the UK financial system thrives in a post-Brexit world, which is the plan, it will not be 10 times GDP, it will be 15 to 20 times GDP in another quarter of century because we will keep our market share of cross-border capital flows.”
City AM reports that the governor said that the level of regulation after Brexit will remain at least as high as it currently is, which is “a level that in many cases substantially exceeds international norms”.
Speaking about the 10th anniversary since the start of the global financial crisis in August 2007, Carney added that central banks and regulators could not relax the rules that were put in place.
“The problem you have is that the same issues re-emerge under different labels … and the progress that’s been made … is gradually chipped away,” said Carney.
“There will always be innovations, there will be new strains, new vulnerabilities, old wine in new bottles, that will emerge around the periphery of the system. The challenge is for institutions such as the Bank is to anticipate those problems without snuffing out innovation.”
Carney’s comments come after the BoE cut its forecasts for economic growth today, which pushed the pound to a nine-month low.
Speaking at the Bank, Carney warned activity could slow further if trade becomes more difficult after Brexit with reduced access to the customs union and the Single Market.
