Damaging Britain’s financial services will hit EU

Andy jalil –
andyjalil@aol.com –

Any attempts by the 27 other European Union (EU) member states to undermine London’s global financial stature will wind up hurting them as well, experts have told UK Members of Parliament. Representatives from influential groups in London’s financial district (known as the City) also told the International Trade Committee the City would need to devise a unique solution in order to ensure that firms retain access to EU markets after Britain leaves the Union.
Chief Executive of the Investment Association, Chris Cummings, cautioned attempts by other European cities to steal away the financial capital crown for themselves could result in the sector becoming less powerful. He said: “The greatest danger is fragmentation, not only to capital pools but to talent.” The Euro clearing has been earmarked as ripe for the picking from the Brexit fallout, especially given the UK had to fend off a legal battle to return the industry to the euro zone pre-Brexit vote.
“If the EU 27 wish to pursue a move to repatriate (clearing) then the result of the ensuing fragmentation would not help EU 27 corporates. It is an issue they need to think very, very carefully about,” warned Gary Campkin, Director of Policy and Strategy at TheCityUK which is a private-sector membership body and industry advocacy group promoting the financial and related professional services industry of the UK.
TheCityUK published a report arguing Brexit could be used as a once-in-a-generation opportunity to redesign policy to boost trade in the UK. Campkin told MPs that emerging economies elsewhere in the world represent “one of the biggest opportunities coming from Brexit.”
Top EU officials are worried that a bad Brexit deal will backfire for remaining member states, a leaked report has revealed. The document warns against any deal that harms the City (financial district) of London’s link with EU companies. “The exclusion of the main European financial centre from the internal market could have consequences in terms of jobs and growth in the EU,” the report said. “It is in the interest of EU 27 and the UK to have an open discussion on this point.”
The report was put together by the European parliament’s committee on economic and monetary affairs. It urges the EU negotiators to strive for a “workable” deal with Prime Minister Theresa May and her team to protect the financial district of London, or else or else the other economies in the Union could feel the fallout. “If financial services companies choose to leave the UK as a result of Brexit, the consequences should be carefully evaluated,” the document said. “A badly designed final deal would damage both the UK and the other 27 EU member states.”
Commenting on the leaked report, the Chairman of the Honorary Advisory Council of the Financial Services Negotiation Forum, Anthony Belchambers, said: “It’s not altogether surprising the UK and the EU are realising you can’t draw a sharp line between the two, and that’s a welcome degree of pragmatism. They recognise a draw bridge between the EU and the UK would hurt both sides.
The significance of UK’s financial sector should require the EU to offer a “reasonable” deal on Brexit, according to Germany’s finance minister. Under the circumstance of tough negotiations between the UK and the EU, this is a significant statement from the powerhouse of the EU economy. Speaking to German newspaper Tagesspiegel, Wolfgang Schauble warned against seeking to “punish” Britain for leaving the EU.
“We want to keep Great Britain close to us,” he said. “The London financial centre, for example, serves the European economy as a whole. London offers financial services in a quality that is not found on the continent. That would change a bit after the split, but we have to find reasonable rules here with the UK.”
The Bank of England has faced scrutiny over its revised forecasts for the economy and the governor, Mark Carney, who had been criticised for his predictions on the economy, has also now said the EU will take an enormous hit if the City is cut off during Brexit talks.
He said the consequences of a messy Brexit deal “would be greater for Europe than the UK.” At the time of the referendum his view was that leaving the EU would have an adverse effect on the UK economy.