Jun 20, 8:44 AM EDT

Bank of England Governor Mark Carney is downplaying the possibility of an interest rate increase amid the uncertainty wrought by Britain's pending departure from the European Union



Photo Gallery
Animal census at the London Zoo
Latest News from Britain
British Prime Minister Theresa May tried Monday to reassure European Union citizens living in Britain that their lives and those of their family will not be disrupted when Britain leaves the EU in 2019

Britain's government says it is donating 1 million pounds ($1.27 million) to support survivors of the devastating fire at Grenfell Tower

American cladding maker Arconic says it is discontinuing global sales of one type of composite paneling for use on high-rise buildings following the deadly fire at a London apartment tower

A Canadian captain made history Monday by becoming the first female infantry officer to lead the Changing of the Guard ceremony at Buckingham Palace in London

London's fire disaster is symptomatic of larger safety issues globally as regulations fail to keep up with changing materials and budget cuts

Cladding maker Arconic discontinues sales of one type of cladding in high rise buildings after Grenfell fire

Multimedia
A district summary of the Beige Book
Measuring economic stress by county nationwide
Mall malaise: shoppers browse, but don't buy
Unemployment by the numbers
Family struggles with father's unemployment
Saying an affordable goodbye
Hard times hit small car dealer
Latest Economic News
Business confidence in Germany has risen to another record high as managers' view of both their outlook and their current situation brightens, according to a closely watched survey

A global financial organization says the world economy has picked up and prospects for the next few months are the best in a long time

Puerto Rico's governor says he will go to court to fight a federal control board's call to cut a public pension system by 10 percent, furlough tens of thousands of government workers and eliminate Christmas bonuses

A closely watched survey shows that economic growth across the 19-country eurozone has slipped back in June to a five-month low but that the region still enjoyed its best quarter for more than six years

Few events outside of war can have quite as much impact on the economy of a country as Britain's decision a year ago to leave the European Union

Mexico's central bank has raised its benchmark interest rate a quarter-point to 7 percent in an effort to limit inflation

Egypt doubles subsidized food millions of ration card holders depend on, raises pensions amid soaring prices

Egyptian President Abdel-Fattah el-Sissi says the government will increase the monthly capacity of ration cards through which it distributes food subsidies in an attempt to ease the effects of hard-hitting economic reforms

A United Nations economist has been arrested in New York on fraud charges related to his hiring of a Bangladeshi domestic worker

Cyprus' finance minister says the country has managed to secure the lowest-ever interest rate on a public bond issue, hailing it as a strong signal of trust from international markets in the Cypriot economy

Interactives
Greece's Debt Threatens to Spread
State budget
gaps map
Auto industry problems trickle down, punish Tennessee county
Women give old Derby hats a makeover in tough economy
S.C. town deals with highest unemployment in South
How mortgages were bundled and sold as securities
Tracking the $700 billion financial bailout
Tracking the year's job losses
State-by-state foreclosures since 2007
Credit crisis explained
Presidents and their economic legacies
Lexicon of the financial crisis
Americans' addiction to debt

LONDON (AP) -- Two of the most senior figures in Britain's economy argued Tuesday for cooperative, not adversarial, talks over the country's exit from the European Union, calling for a deal that benefits both sides rather than erecting barriers that will hurt everyone.

Treasury chief Philip Hammond and Bank of England Governor Mark Carney said in separate speeches that Britain must use the negotiations to reduce obstacles to trade in services while protecting the benefits of free trade in goods. Services, including banking and insurance, account for 80 percent of Britain's economy.

"It would be all too easy to give in to protectionism," Carney said. "But as we learned in the 1930s, that road leads neither to equity nor prosperity. Raising barriers to trade disproportionately hurts the least well off through higher prices and fewer opportunities."

Carney also downplayed the possibility of an interest rate increase amid the uncertainty wrought by Britain's pending departure. He said that while rates will have to rise as the economy strengthens, "now is not yet the time to begin that adjustment."

In addition to his comments on trade, Hammond said immigration should be managed but not "shut down" as he emphasized the need to protect economic growth. The remarks at the annual Mansion House session for leaders of Britain's financial industry suggest Hammond prefers a deal that preserves more trade links with the EU than the "hard Brexit" supported by his boss, Prime Minister Theresa May.

May has put her focus on cutting EU migration, and the EU has said that if Britain wants to tighten its borders for EU citizens, it would not be allowed to remain in the tariff-less EU single market.

The government, which began formal talks with the EU on Monday, is under pressure to soften its stance on Brexit after losing its majority in an early election this month. Analysts believe many voters rejected May's Conservative Party because of concerns its approach to the talks would dim Britain's economic prospects.

Some 90 percent of those surveyed in a recent poll thought free trade was good for the economy, regardless whether they voted to leave the EU or remain, Hammond said.

"Just as the British people understand the benefits of trade - so, too, they understand how important it is to business to be able to access global talent and to move individuals around their organizations," he said.

Hammond also took a shot at his EU counterparts, suggesting that recent attempts to increase regulation of financial services were a veiled attempt to wrest business away from Britain.

"Let's be honest, we are already hearing protectionist agendas being advanced, disguised as arguments about regulatory competence, financial stability, and supervisory oversight," Hammond said. "We can have no truck with that approach."

The European Commission, the bloc's executive body, has moved to tighten regulation of clearinghouses that process euro-denominated contracts, threatening tens of thousands of jobs in Britain once the country leaves the EU. Under rules proposed last week, any clearinghouse considered important to the EU financial system would have to accept direct oversight from EU regulators and, if requested, relocate to inside the bloc.

Clearinghouses act as intermediaries to reduce the risk of default by ensuring funds are delivered to the seller - a way of undergirding the financial system. London is currently the European center for this business, handling 98 percent of all euro-denominated contracts for interest rate swaps.

Carney, whose agency oversees much of Britain's financial system, said turning inward would increase costs for business and reduce financial stability. Instead, the two sides should look for a "cooperative and reciprocal agreement" that strengthens the financial system, he said.

"Fragmentation is in no one's economic interest," Carney said. "Nor is it necessary for financial stability. Indeed it can damage it."

© 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Learn more about our Privacy Policy and Terms of Use.