The United States must prepare for the very real possibility Britain will leave the European Union without an exit agreement, Treasury Secretary Steven Mnuchin told lawmakers on Tuesday.
“I think at this point we need to be prepared for a hard Brexit as a very realistic outcome,” Mnuchin said during testimony to the House Committee on Financial Services.
He added that the US Treasury had coordinated with the Federal Reserve and other US banking regulators to be ready for such a scenario, as London and Brussels scramble to avoid a potentially chaotic “no deal.”
Britain is currently due to exit the EU on Friday and as yet has no agreement in place to govern economic ties with the bloc afterward. Economists say crashing out without a deal would be a seismic event.
But European leaders on Tuesday were preparing to offer another postponement after Prime Minister Theresa May made last-ditch visits to Paris and Berlin, begging for more time.
British lawmakers have on three occasions now rejected the post-Brexit agreement May negotiated with Brussels.
May asked to be given until June 30 to arrange Britain’s orderly departure but EU leaders fear that will not be long enough for British lawmakers to ratify a new deal and are now expected to offer her up to a year.
EU Council President Donald Tusk said Tuesday in a letter to EU leaders that there was “little reason to believe” the ratification process could be completed by May’s preferred June 30 departure date.
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