First EU climbdown as Brussels chief calls for ‘special’ City deal

THE European Union’s chief Brexit negotiator has hinted at a deal for the City in the first major climbdown from Brussels.

Michel Barnier told a private meeting of MEPs there must be a ‘special’ relationship for financial services, according to The Guardian.

Unpublished minutes suggest that he said: ‘There will be a special/specific relationship. There will need to be work outside of the negotiation box … in order to avoid financial instability.’

It is the first crack in the wall of EU unity, with leaders previously insisting they would cut London off and plotting to take its business.

However, there are concerns that European firms would suffer badly if they were unable to access the City, which is the Continent’s key source of finance.

This week, Bank of England Governor Mark Carney said moves to put up barriers would hurt the EU more than the UK.

‘The financial stability issues are greater on the Continent than they are for the UK,’ he told the Treasury Select Committee on Wednesday. ‘There’s tremendous capacity, depth, breadth of financial services here in the UK.

‘At the point of leaving, there will be capacity taken out because certain institutions aren’t authorised. That is more likely to affect Europe than the UK.’

Business leaders in London have been pushing for a special deal that will keep markets open and trade flowing freely.

Speaking this week, London Stock Exchange boss Xavier Rolet said the EU was not economically competitive and the UK’s departure could spark a change. ‘Greater focus on economic competitiveness could be the gift of the UK to the EU as it leaves,’ he said.

‘This is a litmus test as to whether the EU … is going to do a deep dive.’

At the same time, the City’s top lobby group rowed back on warnings that leaving the EU would cut British banks off from the Continent.

Finance firms had claimed remaining in the single market was the only way to protect jobs and prevent a mass exodus of business from London.

But TheCityUK, which represents the capital’s £45billion finance industry, is now calling for a ‘bespoke deal’ instead.

A spokesman for the European Commission told The Guardian that the minutes of the meeting of MEPs did not accurately represent Mr Barnier’s views.