LONDON: Mark Carney will stay on as Bank of England governor until the end of January 2020 to help navigate the turbulence of Brexit, Britain's finance minister said on Tuesday, as he warned time was running out to secure a deal with the EU on future ties.
The United Kingdom is due to leave the European Union on March 29, but no agreement has been reached on the terms of its exit. Rivals to Prime Minister Theresa May are circling and some lawmakers are pushing for a rerun of the 2016 referendum.
Finance minister Philip Hammond said the government was devoting all its efforts to securing a deal on a new relationship with the EU. Carney's continued presence at the central bank will help Britain negotiate the aftermath, he said.
"I have been discussing with the governor his ability to be able to serve a little longer in post in order to ensure continuity through what could be quite a turbulent period for our economy in the early summer of 2019," Hammond said.
Carney, a former Goldman Sachs banker, has run the Bank of England since 2013. He gained respect from investors for his handling of the effects of the 2016 Brexit vote.
Since the shock vote to leave, companies have spent millions of pounds to prepare for Brexit. Many chief executives fear Britain could still leave without a deal, a scenario they warn would spook financial markets and silt up the arteries of trade.
Sterling, which tumbled after the 2016 vote, has recently been moving sharply on Brexit news. It reached its highest level since early August on Tuesday amid increased hopes for a deal, but then gave up its gains to stand at $1.3002.
As May tries to clinch a deal with Brussels, she is facing rebels in her Conservative Party who say they will vote down any deal that fails to deliver a sharp break with the EU.
Michel Barnier, the EU's chief negotiator, said on Monday that a Brexit deal was possible "within six or eight weeks" if negotiators were realistic in their demands.
BREXIT DEAL?
Hammond warned that time was running out.
"We are working against the clock, we understand that," Hammond told parliament. "We will be working flat out over the coming weeks and months to achieve (a deal)."
May's spokesman said she saw an informal EU summit in the Austrian city of Salzburg next week as a "staging post" in Brexit negotiations that would allow EU leaders to discuss her proposals for the first time.
But business chiefs are worried.
The wrong Brexit deal could cost tens of thousands of jobs in the British car industry, the boss of Jaguar Land Rover said, adding he had no idea whether his plants would be able to operate in Britain after March 29.
"Currently I do not even know if any of our manufacturing facilities in the UK will be able to function on the 30th," Ralf Speth said.
He added that the company would not be able to build cars if customs checks meant that the motorway to and from the southern English port of Dover, which is used to transport components, becomes a "car park" due to snarl-ups.
Under May's proposals, Britain will seek a free-trade area for goods with the EU and accept a "common rulebook" for goods. Rebels say that will keep the UK under the EU's sway for years.
At a presentation by economists who favour Britain's leaving without a deal, Conservative lawmakers who support Brexit warned that May would have to ensure Britain was independent of the EU after Brexit.
Any joint EU-UK political statement, lawmaker Steve Baker said, would have to "point towards an advanced free-trade agreement which leaves us as an independent country".
Boris Johnson, May's former foreign minister and a leading Brexit-supporting rebel, said Britain should not accept EU single market legislation.