Bank of England's Mark Carney 'in plot to make Theresa May abandon Brexit timetable'

Mark Carney is working on a 'secret plan' for a transitional arrangement which would see Britain stay in the single market until 2021, it is reported

Bank of England governor Mark Carney (Reuters)

The Bank of England governor is urging Theresa May to abandon her timetable for completing Brexit by 2019, it has been reported.

Mark Carney is working on a 'secret plan’ for a transitional arrangement which would see Britain stay in the single market until 2021, to head off the worst economic damage.

The governor has held private meetings and dinners in the past two weeks, appealing to business leaders to focus on a common goal for Britain’s EU exit, the Sunday Times reported.

Today, the move brought criticism from Michael Gove, one of the key Brexit campaigners, who called for a “clear, clean and simple” divorce.

The former Cabinet minister called the single market a “bureaucratic web” – and accused some people pushing for a transitional deal of trying to avoid Brexit altogether.

Mr Gove told the BBC’s Andrew Marr programme it would not be necessary, adding: “There is a tendency to over-complicate this process

“My worry is that there are some people who can’t get over the fact that the British people have voted to leave the European Union.”

Many pro-Brexit MPs are suspicious of Mr Carney, because of his pro-Remain stance during the referendum campaign.

His new approach is believed to be that businesses need time to adapt to leaving the single market – assuming that is what the government eventually decides to do.

Banks are already drawing up contingency plans to move parts of their business to the EU, because of fears that “passporting” rights – to trade freely in the EU – will be lost.

The governor is calling for bosses to demand a period of “continuity” after the Brexit negotiations conclude, to prepare for whatever deal can eventually be struck with Brussels.

It would mean companies continuing to operate under the current trading rules – almost certainly including freedom of movement for EU citizens - until 2021.

The proposal is said to have been dubbed the “Brexit buffer” in the City, although the wider economy, as well as financial services, would be cushioned.

Mr Carney, who is due to step down in June 2019, hosted two dinners for about 50 senior investment bankers and then finance directors of the high street banks, according to the newspaper.

A banker who attended one dinner said: “Carney knows there needs to be a two to three-year extension to allow Britain to adjust from the old rules under Europe to the new order. His key word is continuity."

The governor is making similar appeals for a smooth transition in Europe, via the G20's Financial Stability Board, bankers say.

The Prime Minister has pledged to invoke Article 50 by the end of March, intending for Brexit to be concluded in the spring of 2019.

Ms May herself has recognised the danger of a so-called “cliff edge” if – in the absence of a new trade deal – firms must suddenly revert to steep World Trade Organisation (WTO) tariffs, but No.10 denied that meant a transitional deal is being sought.

However, she has refused to show her hand - insisting that could jeopardise her ability to strike the best deal for Britain – leading to rising tensions and criticism.

The Bank of England declined to comment to The Sunday Times.