UK chancellor, BoE chief stress Brexit perils

Carney mocked Foreign Secretary's argument that Britain can have its cake and eat it by quitting the European Union

The two most senior custodians of Britain's economy on Tuesday laid out arguments for a Brexit that protects jobs and financial health -- a day after the government prioritised a clean break with the EU.

Seeming to contradict some of the "hard" Brexit rhetoric espoused at the start of negotiations with the EU on Monday, finance minister Philip Hammond and Bank of England governor Mark Carney stressed the perils of an abrupt divorce from Britain's biggest trading market.

Carney even mocked Foreign Secretary Boris Johnson's argument that Britain can have its cake and eat it by quitting the European Union but still retaining the benefits of membership.



"Before long, we will all begin to find out the extent to which Brexit is a gentle stroll along a smooth path to a land of cake and consumption," Carney said at the annual Mansion House event, which was postponed from last week by a deadly fire in a London tower block.

"Depending on whether and when any transition arrangement can be agreed, firms on either side of the channel may soon need to activate contingency plans," the governor cautioned.



The central bank chief, to the ire of some Brexiteers, has long argued that Britain should proceed on a smoother glide path out of the EU by agreeing transitional rules for its banks and companies.

Hammond, whose stock has risen since Prime Minister Theresa May emerged wounded from a general election setback this month, singled out financial services as a key driver of the economy.

While Brexit minister David Davis on Monday stressed that Britain would have to quit the EU's common market and customs union, Hammond agreed with Carney on the need for a transitional deal "to avoid unnecessary disruption and dangerous cliff edges".

Ensuring that Brexit does not imperil British jobs or impoverish living standards "will require every ounce of skill and diplomacy that we can muster", he said.

"Yesterday was a positive start. It will get tougher," the chancellor of the exchequer added.

"But we are ready for the challenge."