Dominic Raab dismisses EU threat to City of London
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The UK was hoping to strike a deal over the British financial sector’s role in Europe, which would allow for mutual recognition of financial service rules between London and Brussels. But despite a “memorandum of understanding” being provisionally agreed in March this year allowing for engagement on financial industry matters, no “equivalence” deal for the sector has been signed.
Last night, Mairead McGuinness, European Commissioner for Financial Services also admitted “no negotiations” were taking place on securing a deal.
The Irish politician stressed when it came down to equivalence, Brussels were “now looking at what happens in the future.”
Ms McGuinness also argued any financial services deal would be in the “best interests of the financial stability of the European Union.”
The Commissioner, who was appointed in September 2020, added Brussels had no “poker cards” on financial services because she claimed London made it “very clear from the outset that finance wasn’t part of the conversation” during initial negotiations on the Trade and Cooperation Agreement.
Because of this, she claimed the European Union would have multiple financial centres in the future.
Ms McGuinness said: “What it does mean though for the European Union is perhaps not one main financial centre as London was the main financial centre for the European Union.
“It [London] now is outside so we will see in my experience and my view, some centres for different services emerging whether it’s Frankfurt or Dublin or Amsterdam, you’re going to see this developing.
“I think there are opportunities for many member states in this area.
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“The idea of a central place like London, I think that was very appropriate until Brexit.
But she added: “I think Covid has now shown us that one location isn’t always necessary because we now know that people can work from all sorts of places.
“But I think and I can’t stress this enough, the role that I play is to make sure the financial system is stable.”
Ms McGuiness also sounded optimistic of full approval of the “memorandum of understanding” on financial services by the EU’s 27 members.
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She said the European Commission would have regular dialogue and discussions with the UK on financial service matters.
The strict tone from Brussels comes after Chancellor Rishi Sunak pledged he would “sharpen” the competitive advantage of the UK financial services sector now the UK had left the EU.
In his first Mansion House speech, traditionally an annual address given by the Chancellor of the Exchequer in the City of London financial district, Mr Sunak said earlier this month that Britain’s departure from the European Union was a unique opportunity to tailor rules while maintaining high regulatory standards and open markets.
Brexit has largely severed the City’s ties with investors in the EU, triggering a shift in over 7,500 financial jobs from London to new hubs in the bloc, with Amsterdam leapfrogging London to become Europe’s biggest share trading centre.
In response, a UK Government source said: “The EU does not really have any reason to deny the UK access to their financial markets and industries.”
An EU Commission spokesperson said work on approving the “memorandum of understanding” was ongoing.
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