Some firms 'contingency planning' on London HQs amid Brexit threat, says Carney

Elevated view of the City of London at dusk

A number of major financial sector firms are "contingency planning" to move headquarters out of the City of London if Britain votes to leave the European Union, Bank of England governor Mark Carney has told MPs.

Mr Carney said the City of London would "without question" lose business if it failed to negotiate the continuation of existing mutual recognition agreements within the financial sector following a vote for Brexit.

He warned that negotiations of this kind "in general take a very long time to achieve" and may involve ceding some measure of the UK's sovereignty.

Giving evidence to the House of Commons Treasury Committee, the governor stressed that the Bank was not making a formal recommendation on whether voters should opt to Remain or Leave in the June 23 poll.

The Bank will only look at the impact on its ability to meet its remit to safeguard financial and monetary stability in the UK and will take action to mitigate any risks from the vote, he said.

It had already announced on Monday night that it would pump emergency cash into the system to ward off any threat to banks.

In the event of a vote for Brexit, Mr Carney said the Bank "will do everything in our power to discharge our responsibility to achieve monetary stability and financial stability".

But he added that he could not "provide a blanket assurance that there would not be issues in the short term with respect to financial stability and that potential reduction in financial stability could be associated - and normally would be associated - with poor economic outcomes, as we have seen in the past".

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