Britain’s new finance minister Philip Hammond sought to address concerns among global finance chiefs about the uncertain path ahead for the country’s exit from the European Union, saying there could be more clarity later this year.
But Hammond also warned that volatility in financial markets was possible throughout the two-year period set out for the Brexit negotiations which Britain has yet to trigger.
“We have to be ready as government, the Bank of England has to be ready as monetary authority, throughout that period to respond to any instability created by that uncertainty and to ensure that the economy continues to operate smoothly,” he said.
Hammond, speaking after his first meeting with his fellow global finance chiefs from the Group of 20 economies, said concern about the shock result of Britain’s EU membership referendum had increased uncertainty about the global economy.
Officials from several G20 countries attending the meetings in the Chinese city of Chengdu on Saturday and Sunday said they wanted more clarity on how the Brexit process would unfold.
“What will start to reduce uncertainty is when we are able to set out more clearly the kind of arrangement we envisage going forward with the European Union,” Hammond said.
“If our European Union partners respond to such a vision positively – obviously it will be subject to negotiation – so that there is a sense perhaps later this year that we are all on the same page in terms of where we expect to be going. I think that will send a reassuring signal to the business community and to markets,” he said.
Hammond also said he did not think that a survey of British businesses published on Friday, which showed the sharpest fall on record in a purchasing managers index, was a sign that the country’s economy was in a recession after the referendum.
“What it does is underscore the hit to confidence that the uncertainty following the referendum decision has created,” he said.