EU needs the City, says watchdog

BRUSSELS risks causing chaos if it cuts the City out of a Brexit deal, the head of Britain’s official financial watchdog warned last night.

Andrew Bailey said open markets are essential to protect the stability of the global banking system.

The Financial Conduct Authority chief added that a trade agreement between Britain and the EU that covers financial services is in the interests of both sides given the heavy dependence European firms have on expertise in London.

Speaking to City bosses at a dinner organised by the law firm DLA Piper, he said: ‘If as a response to Brexit the EU wishes to change the status quo, it would amount to a decision to close market access, not a decision about whether to open it.

‘It would also be a decision to disconnect the EU from the benefits of global markets. This would have serious adverse consequences, and by no means just for the UK.’

Mr Bailey renewed calls for a transition agreement that would prevent any changes for at least two years after Brexit in 2019.

He added that this would prevent disruption to £26trillion of derivatives trading contracts, and the insurance policies of 30million EU and six million British citizens.