British banks won’t get any special Brexit deals, says EU
A SPECIAL Brexit deal covering British banks is not on the table, the EU’s chief negotiator said yesterday.
Michel Barnier dismissed claims that Brussels ‘desperately needs’ the closest financial relationship with the UK.
He outlined how the EU is preparing to downgrade its ties with the City and said the UK will have to accept the more limited access offered to the US.
The French official claimed the negative impact of Brexit would be ‘substantially higher’ for the UK and suggested that companies may withdraw investment in Britain.
He also claimed that ‘EU talent’, notably nurses and doctors, could stop coming to the UK because they will see it as a less attractive after Brexit.
The comments follow repeated warnings by leading UK figures, such as Bank of England governor Mark Carney, that a bad divorce deal will hurt the EU more than it hurts Britain.
Chancellor Philip Hammond is pushing for a comprehensive trade deal that gives the City privileged access to the remaining 27 EU countries after Brexit.
Outlining the EU’s restrictive approach, Mr Barnier suggested that the huge bonuses of British bankers prompted the financial crisis.
He said: ‘Some argue that the EU desperately needs the City of London, and that access to financing for EU27 business would be hampered – and economic growth undermined – without giving UK operators the same market access as today.
‘This is not what we hear from market participants, and it is not the analysis that we have made ourselves.’ Theresa May has accepted that British firms will lose ‘passporting’ rights that allow them to operate across the EU.
But in an attempt to push for a comprehensive agreement, she wants to build a joint regulatory system and said failure to reach a deal will ‘hurt both economies’. However, Brussels has said that its mechanism for dealing with non-EU countries – equivalence – is the only available solution. The system involves both sides effectively striving to match each other’s rules.
Critics have described the system as inferior for the City and warn that it can be termibility
‘Prepare for the worst’
nated unilaterally by the EU at short notice.
Speaking at a conference in Sofia, Bulgaria, Mr Barnier said yesterday: ‘I can perfectly see the UK’s logic and interest in pleading for a system of “mutual recognition” and “reciprocal regulatory equivalence”. But this will not work.’
He said the UK would be expected to closely mirror EU regulations, citing the possiplace of a future economic crash if it does not.
‘Let’s not have a short memory,’ he warned. ‘We all saw during the crisis that the risks of financial instability were ultimately borne by taxpayers – not only in the UK.
‘We saw for instance that remuneration of bankers set the wrong incentives and allowed excessive risk-taking.’
Insisting that the EU’s system was the only option available to the UK, Mr Barnier added: ‘Why would the equivalence system, which works well for the US industry, not work for the City?
‘In the meantime [before a deal] both market participants and public authorities should hope for the best, but prepare for the worst.’
Mr Barnier used his speech to warn that ‘frictionless trade’ is not possible for the UK outside of either a customs union or the EU single market. ‘Nationalist interest’ – Page 6