President of European Central Bank says Britain should address uncertainty over how withdrawal from EU will play out

This article is more than 3 years old

This article is more than 3 years old

Mario Draghi, the president of the European Central Bank (ECB), has urged the British government to disclose more information about its plans to leave the EU.

He told the European parliament’s committee on economic and monetary affairs that the UK should address the uncertainty over how Brexit will play out.

Draghi said Britain would bear the brunt of the economic damage if Brexit created a UK economy with lower migration and weaker growth in trade and investment.

He told MEPs: “We are looking for a concept by the UK government where it would share its views and plans with its own citizens, and see what they say about that, before we can actually express our views on this.”

The ECB president said it was not yet possible to say whether Brexit would cost jobs in the City or mean that London-based banks lost their passporting rights to offer services across the EU.



Asked about the consequences of the vote to leave the EU, Draghi said the only answer to many questions was “we don’t know”.

“And the reason we don’t know is we have to see exactly how the final shape of the negotiations will be and how long they will last. It’s pretty clear that the longer they last, the bigger the uncertainty,” he said.

Draghi predicted that Brexit would raise about questions about eurozone sovereignty. Last year, the ECB lost a legal fight to have the clearing of euro-denominated securities moved from London to the eurozone, and Draghi suggested that legislators might want to consider changing the law.

“If, in the long run, the risk of a less open UK economy in terms of trade, migration and foreign direct investment were to materialise, there would be a negative impact on innovation and competition, and thus, productivity and potential output,” he said. “Such developments would first and foremost weigh on the UKeconomy.”

Bank of England prepares to protect City firms from hard Brexit Read more

At the weekend, it emerged that the Bank of England governor, Mark Carney, had held talks with senior City figures about negotiating a “transitional arrangement” to protect financial companies from the dangers of suddenly losing full membership of the single market.

Paresh Davdra, the chief executive of foreign exchange firm RationalFX, said central bankers were becoming frustrated that elected politicians were not pulling their weight.

“Draghi’s comments likely reflect a frustration that Carney will be able to relate to, in which central banks have to fulfil certain roles that policymakers traditionally undertook in order to keep the economy stable,” Davdra said.

“Draghi‘s comments on Brexit further acknowledge this, in his call for the prime minister, Theresa May, to share more about the Brexit strategy, days after it was revealed Carney was involved in contingency planning in the case of ‘hard Brexit’.”