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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

London financial firms step up diplomacy with EU

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Andy Jalil - andyjalil@aol.com - Companies in the financial district (‘The City’) of London are seeking to take control of their post-Brexit future by ramping up engagement with EU member states, as it emerges that ministers have shelved plans for a financial services white paper (policy documents produced by the Government that set out their proposals for future legislation).Meetings have been taking place with weekly envoys from the City of London Corporation and TheCityUK meeting ministers across the continent.


Previously, discussions had been on relatively informal terms, but it is understood that the financial district’s diplomatic efforts have been ramped up after British and EU negotiators reached “sufficient agreement on the first phase of talks in mid-December.


Plans for future trade are now being discussed in far greater detail, with the City-backed International Regulatory Strategy Group’s (IRSG) blueprint for financial services — which was published late last year — being used as the basis of the talks.


The IRSG report — which is a new basis for access to EU/UK financial services post-Brexit, containing proposals on the terms of a free trade agreement — compiled by former minister Mark Hoban and law firm Hogan Lovells, proposes a managed divergence model that its authors believe will maintain the highest possible level of access after Brexit.


Although it has been designed for financial services, it can be applied to a large number of professional services and other sectors.


Hoban is travelling around Europe to press the case, visiting Copenhagen and Brussels with trips to follow to Portugal and Germany.


He said: “Engagement has stepped up.


We want cheerleaders for this (model) but also we need to find ways to reassure those people who are sceptical.”


The City has taken its future into its own hands as it emerged the government’s long-awaited financial services paper may never be published.


Reports said ministers have indefinitely postponed plans to publish a paper, despite it being promised since last summer.


With London being a financial hub, it is of no surprise the City shows such concern on negotiations.


“When so many other sectors and issues have been given this clarity, the City is left in the dark,” said the City of London Corporation’s policy chief, Catherine McGuinness.


Conservative MP and former Tory cabinet minister, Nicky Morgan, who chairs the influential Treasury Select Committee, added: “The failure to publish a position paper on financial services sends all the wrong signals.


Some level of clarity has been provided for numerous sectors.


Financial services firms will be seriously concerned at the chronic state of uncertainty.”


Quite apart from the approaches the City is making to the member states, the Brexit Minister, David Davies goes on with his negotiating agenda.


This is a sensitive time for the EU, when the unity of the negotiating position will be tested.


As negotiations move from transition to trade, national interest of the other 27-member states will come to the surface and Michel Barnier, the EU’s appointed chief negotiator, will find himself haggling with the heads of member states as much as he will with the British government.


Barnier’s mantra that there is no deal on offer for UK financial services was tested by Emmanuel Macron who said during his visit to the UK last week — holding meetings with the Prime Minister Theresa May — that a bespoke trade deal is on the cards, albeit with preconditions and limitations.


Such is the risk of an EU leader contradicting Barnier, the French embassy in London hurried out a statement clarifying the President’s remarks and putting him back into line alongside the EU’s official negotiator.


Nevertheless, a deal including financial services is (in the words of Bank of England deputy governor Sam Woods) eminently achievable.


The obstacles are political, but the risks associated with not achieving one are very real, for the EU as much as the UK.


While a slow bleed of London’s financial infrastructure and jobs remain a risk (albeit it, an avoidable one) over the long term, the priority for both sides in the current negotiation must be safeguard sufficient and sufficiently frictionless levels of access.


European businesses depend upon it.


The City remains, as Mark Carney, the Bank of England governor, put it, Europe’s investment banker.


It should be prioritised by UK negotiators and valued as a European asset by the officials of the European Union.


(The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)


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