'Dunkirk spirit': UK banks are preparing billions in emergency lending to support the economy under a no-deal Brexit
- Big banks are ready to lend money to UK businesses in order to prop up the economy in the event of a no-deal Brexit.
- The bank lobbying body, UK Finance, said it was ready to help coordinate lending as it did following the collapse of Carillion and Monarch Airlines, The Telegraph reported.
- Ministers have drawn up contingency plans for a no-deal exit from the EU and have put the Army on standby to deliver food, medicine, and fuel.
LONDON - Major banks are preparing to support UK businesses with credit if Britain falls out of the EU next March with no deal on future relations with the bloc, highlighting just how disruptive crashing out of the EU could be to the UK economy.
The Telegraph reported on Sunday that CEOs and banking lobbying groups are ready to extend lines of credit to soften the economic blow by blockages in trade and financial flows in the event of a no-deal Brexit. Officials at the Bank of England's Prudential Regulation Authority (PRA) have reportedly begun talks with lenders in recent weeks over how they can help buttress the economy.
The report came on the same day as The Sunday Times reported that the government has put the army on standby in case of a disruptive Brexit, drawing up plans for them to deliver food, medicine and fuel to keep the country moving.
Prime Minister Theresa May's government hopes to reach a final agreement on Britain's post-Brexit relationship with the EU at a key summit in October. But Europe's chief negotiator Michel Barnier has called into question the viability of the UK's proposals, saying there are elements of the government's proposed deal that he doesn't understand.
The comments raise the risk that Britain could fall out of the EU without a deal when the Brexit deadline is reached next March. This would likely cause huge disruption to everything from medicine and food supplies to car manufacturing.
One executive at a FTSE 100 bank told The Telegraph: "Extending credit to firms impacted is one thing we're looking at. It's a bit Dunkirk spirit type of stuff. But banks are in reasonably good shape and can cope."
Banking lobbying body, UK Finance, told the Telegraph it is ready to help coordinate lending from the banks as it did following the collapse of outsourcing firm Carillion and Monarch Airlines. The funding could be used to help firms who are incurring extra costs from supply chain delays or other effects of a no-deal Brexit.
Stephen Jones, chief executive of UK Finance, told the Telegraph: "If the industry, the Government, and the regulator want us to act as a convener of the industry we will, of course, do that."
Banks themselves have concerns over the enforceability of billions of pounds of cross-border contracts, customer data transfers, and access to the European payments system.
The unnamed FTSE 100 banking executive told the Telegraph: "We want to make sure we don't make a bad situation humongously worse. We're thinking about what to do in a no deal storm… If there are huge queues of lorries at Calais and Dover, what is the banking equivalent of that?"