Treasury chief outlines UK plan to remain a finance hub

Britain's Treasury chief is expected to outline plans to ensure the nation's financial services industry can thrive after the United Kingdom leaves the European Union in a speech that was to be delivered to top business executives Thursday night.

Philip Hammond said in excerpts released ahead of his annual Mansion House speech that London will remain the "global capital of finance".

Hammond will highlight plans to negotiate international agreements easing trade in goods and services, saying that "being open to the world" is the key to future success.

He says "our vision is for a set of new partnerships combining new tools, like free trade agreements, and existing ones, like our financial dialogues, looking across sectors of the industry and positioning the UK as the most global financial services market in the world".

Earlier on Thursday, the Bank of England decided to keep its key interest rates on hold amid conflicting signals on the economy and uncertainty over Brexit.

Members of the central bank's monetary policy committee voted 6-3 to keep the main rate at 0.5 per cent as economists looked to their August meeting, when the next set of quarterly forecasts are published.

Timing dilemma

The policymakers face a dilemma on the timing of the next increase. The economy barely grew in the first quarter and a pickup in wage growth has slowed. But inflation remains above the two per cent target, at 2.4 per cent. Higher rates tend to rein in inflation, but can also weigh on economic growth.

Minutes of Thursday's policy meeting suggest the policymakers think the economic slowdown at the start of the year is temporary.

As a result, the policymakers agreed that rates would have to be increased, but "all members agree that any future increases in the bank rate are likely to be at a gradual pace and to a limited extent".

"While it's not out of the question that the MPC raises Bank Rate in August, we continue to expect the committee to wait until next year," says Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

- AP