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Chancellor backs Bank of England boss for eight-year term in job

Published 06/10/2016

Philip Hammond insists he wants a Brexit deal which will ensure good access to European markets
Philip Hammond insists he wants a Brexit deal which will ensure good access to European markets

Chancellor Philip Hammond has backed Bank of England Governor Mark Carney to serve a full eight-year term and said the needs of the financial services industry were "a very high priority" as he made his first US trip since taking over the Treasury.

Mr Hammond brushed off speculation that the Government was pushing an anti-business agenda by seeking a "hard Brexit", which would pull Britain out of the single market in order to clamp down on immigration.

"We don't recognise this distinction between "hard Brexit" and "soft Brexit", Mr Hammond told Bloomberg TV.

"We want to get the right Brexit for Britain, the one that works for Britain and works for the European Union as well, because this has to be about mutual advantage. It has to be about a mutually beneficial solution.

"The financial services sector is a very important part of the UK economy. It is the largest single value contributing sector, and we will place a very high priority on getting the right solution with our European Union partners for the financial services sector."

The comments came as the Chancellor travelled to America to allay fears over the impact of the EU referendum decision by addressing financial bosses in New York, ahead of a meeting of the International Monetary Fund (IMF) in Washington DC.

He gave his backing to Mr Carney, stating that the Governor would be welcome to serve an eight-year term rather than leaving in 2018 as previously planned.

He said: "The governor's doing a good job".

"He will make his decision in due course and that's his decision - he made that very clear. But I certainly would welcome his decision to stay if that is the decision he makes."

Mr Hammond's comments came after Prime Minister Theresa May appeared to take a swipe at the Bank at the Tory Party conference on Wednesday.

She said it was the rich who benefited from the Bank of England printing money and cutting interest rates in the years after the 2008 financial crash, while ''ordinary working-class people'' were asked to make sacrifices in terms of stagnating pay, job insecurity, unaffordable housing and wages undercut by competition from low-skilled immigrants.

Turning his attention to London's powerhouse financial services sector, Mr Hammond attempted to soothe fears that the industry was heading for a major upheaval following the Brexit vote.

The sector is concerned that it could lose crucial passporting rights needed to trade across the European bloc if Britain leaves the single market.

There are also fears that London could see euro-denominated clearing shift to another global financial centre, causing the capital's financial services industry to fragment.

Mr Hammond said: "It's by no means clear to me that the rules of the single market, even after Britain has left, would permit the European Central Bank to require euro-denominated instruments to be cleared inside the euro zone."

However, he said it was the duty of the Government to listen to people who felt disillusioned with globalisation.

"There are people who feel the economy isn't working for them, that they're the losers out of globalisation," Mr Hammond said. "What Theresa May was setting out is a recognition that we have to re-engage those people who feel that they don't have a stake in the economy any more."

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