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 -Published: Thursday, October 10, 2019- The financial sector is ready for no-deal Brexit, said the UK Central Bank By the A.M. Costa Rica staff and wire services The U.K. financial system is prepared to cope with a no-deal Brexit, though uncertainties about the country’s withdrawal from the European Union are weighing hard on the wider economy, the Bank of England said Wednesday to the Associated Press The bank’s Financial Policy Committee, which assesses financial risks, said legislation, temporary permissions and other preparations by British authorities have been made to “ensure that households and businesses will be able to use existing and new services from EU financial institutions.” The wider economy, however, is feeling the strain. “Entrenched Brexit uncertainties, particularly in an environment of weaker global growth, continue to weigh on economic activity in the U.K.,” it said. “Brexit uncertainty is weighing on business investment, the prices of U.K. assets and flows of foreign capital into the U.K.” The statement highlighted commercial property as one sector that’s struggling as global investors become more cautious, said the AP in its report. Britain is due to leave the EU Oct. 31 and Prime Minister Boris Johnson has insisted the country will do so with or without a withdrawal agreement. With little sign of progress in the Brexit negotiations, there are fears that the country could end up leaving in a disorderly manner — a scenario that most economists think will cause damage to the British economy as tariffs and other impediments to trade with the EU are put up. “Although actions by businesses and authorities have resulted in some improvement in the preparedness of the U.K. economy for a no-deal Brexit, material risks of economic disruption remain,” the committee said. Johnson has consistently said that Britain will leave on the scheduled Brexit date even though Parliament has backed a bill that compels him to seek an extension to the deadline if no deal is reached at next week’s EU leaders’ summit in Brussels. Whatever happens at the end of the month, the bank’s Financial Policy Committee said the “core of the U.K. financial system including banks, broker dealers and insurance companies is resilient to and prepared for the wide range of risks it could face, including a worst-case disorderly Brexit.” Follow Associated Press full coverage of Brexit and British politics at it site* Related to Costa Rica, on July, as A.M. Costa Rica reported, the government of the United Kingdom signed the American Association Agreement with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panamá.  According to the U.K. Foreign & Commonwealth Office statement, Ambassador Ross Denny signed the agreement in Managua, Nicaragua, together with trade and economic ministers from each of the six Central American countries. “The agreement will ensure British businesses and consumers benefit from continued trade with Central America after we leave the European Union,” said the Foreign & Commonwealth Office in its statement. “It provides tariff-free trade of industrial products together with liberalization of trade in agricultural food production and fisheries products.” Consumers in the U.K. will continue to benefit from lower prices on goods imported from Central American countries that are parties to this agreement, such as prawns from Honduras and Costa Rican fruit, said the British government. Consumers in Central America will continue to benefit from lower tariffs on products such as drinks and cars produced in the U.K., it added. According to Foreign Office authorities, the trading on these preferential terms rather than on World Trade Organization terms will deliver significant savings and help to support British jobs. The trading relationship between the U.K. and Central America was worth £1 billion in British exports and imports in 2018, the office said reported its statement. The agreement provides a framework for cooperation and development through political dialogue, increased economic ties and work on issues like the environment and human rights, reaffirming Britain’s commitment to a close relationship with Central America, the announcement said. “This agreement is of real importance as we prepare to leave the European Union and strengthen our ties with the rest of the world. It will help provide the certainty business need to be thrive and help turbocharge our economy into the future,” said Jeremy Hunt foreign secretary. “ It has also been achieved thanks to the hard work of U.K. diplomats, and I thank them for their work. We look forward to building on our political and economic ties, with exporters and consumers having the certainty they need to continue trading freely and in confidence abroad.” This agreement replicates the existing EU-Central America trading relationship to ensure continuity in the trading relationship between the U.K. and Central America when the U.K. ceases to be a member of the EU, said the Foreign Office statement. According to the Foreign Office, the secured agreements – either signed or agreed in principle - that account for 64 percent of the U.K.’s trade with all the countries with which the U.K. is seeking continuity, should Britain leave the EU without a deal. “Diageo warmly welcomes the news of a Central America-U.K. Association Agreement,” said Wilson Del Socorro, global director of government affairs for Diageo PLC. “The free flow of international trade is vital to Diageo as it gives us the opportunity to reach more consumers and markets. Central America is an important export market for Diageo and for Scotch whisky.” The U.K.-Central America Association Agreement will come into effect when the current agreement between Central America and the EU ceases to apply. This will take place either following an implementation period if the U.K. leaves the EU with a deal, or on Oct. 31 if the U.K. leaves the EU without one, the announcement said. The U.K. has signed or agreed in principle to 13 trade continuity agreements with 38 countries which include some of the island nation's biggest trading partners. A regularly updated list of all signed agreements is available on the GOV.UK site*. ------------------------ Are you for or against the Brexit without European agreement? We would like to know your thoughts on this story. Send your comments to news@amcostarica.com |
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