Bank of France Governor Francois Villeroy de Galhau warned that the U.K. and European Union need to move to avoid the consequences of an abrupt separation that would pose risks to both economies.
“All actors should as of now undertake all the necessary preparations to avoid any potential ‘cliff-edge,”’ Villeroy said at a lunch organized by the French Chamber of Commerce in London.
On a day when survey data showed the euro-area economy gathering pace and the U.K. was digesting the government’s reduction in the country’s growth prospects, Villeroy said that Britain bears the brunt of the risks related to its departure from the European Union, though other economies are bound to be affected too.
“The British people chose to leave the EU and, even if we regret it, we respect this democratic decision,” he said. “Now we have to work toward reducing uncertainty and the negative impact it may have for the United Kingdom and, albeit to a lesser extent, for the European Union.”
Villeroy also emphasized that EU authorities have a duty to protect the bloc’s financial system and that will mean inevitably that some financial business will shift from Britain to the remaining 27 members of the bloc. Villeroy has repeatedly emphasized the merits of Paris as an alternative financial center to London.
France has already taken some of the spoils as Brexit forces EU institutions out of the U.K. In a vote, Paris won the bid to become the new home of the European Banking Authority when it leaves the British capital.