Friday, 12th April, 2024
Friday, 12th April, 2024

UK presses EU on finance deal for post-Covid recovery

Bank of England governor Andrew Bailey on
Wednesday pressed the EU to agree a post-Brexit financial services deal by
next month for the sake of pandemic recovery on both sides of the Channel.

The costs of the City of London’s lack of access since Brexit were laid
bare in new data showing Amsterdam last month overtook London as Europe’s top
share trading hub.

Rebutting some of the demands made by Brussels in return for the City to
regain access to EU states, Bailey said Britain had no intention of creating
“a low-regulation, high-risk, anything-goes financial centre and system”.

“We have an opportunity to move forward and rebuild our economies, post-
Covid, supported by our financial systems. Now is not the time to have a
regional argument,” the UK central banker said in a speech.

Financial services — a key driver of the British economy — were largely
omitted from the last-minute Brexit trade deal agreed between London and
Brussels in late December.

So from January 1, Britain’s financial sector lost access to the EU’s
single market and its European “passport”, a means for UK financial products
and services to be sold in the EU.

Both sides are instead working towards a March deadline to carve out an
“equivalence” regime under which each would recognise the other’s financial
regulation.

In its absence, Euronext Amsterdam together with two other Dutch share
markets last month displaced London’s historic role as the main equities hub
for Europe, the Financial Times said.

– Crunch talks Thursday –

An average of 9.2 billion euros ($11.2 billion/o8.1 billion) in shares were
traded each day on the Amsterdam markets in January, more than four times
their December figure and higher than London’s 8.6 billion euros, the FT
said.

However, UK officials have played down fears of an accompanying exodus of
jobs from London.

Bailey last month said up to 7,000 jobs have so far been relocated to rival
centres in the EU including Amsterdam — well down on doomsday predictions of
as many as 50,000 losses.

But in Wednesday’s speech and a later interview to the Daily Telegraph, the
central bank chief said Brussels was being unreasonable in its negotiating
demands, in an apparent bid to grab business from London.

“Is the EU going to cut the UK off from itself? There are signs of the
intention to do so at the moment, but I think that would be a mistake,” he
told the newspaper.

“I think that would lead to the fragmentation of markets,” Bailey said,
warning that would in turn lead to higher costs for everyone including
European consumers.

The EU should instead accept healthy competition, Bailey stressed in his
speech.

“I believe we have a very bright future competing in global financial
markets underpinned by strong and effective common global regulatory
standards,” he said.

The finance dispute is part of a wider array of controversies besetting
cross-Channel relations since Britain’s Brexit divorce took full effect at
the end of last year.

On Thursday, senior UK minister Michael Gove is due to hold crisis talks in
London with EU commission vice president Maros Sefcovic over troubled trading
arrangements for Northern Ireland.

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