Brexit will end London’s ‘gateway to Europe’ status, says Bundesbank exec

BREXIT could result in London losing its status as the financial “gateway to Europe”, according to one of Germany’s most influential banking regulators.

Dr Andreas Dombret, who sits on the board of the Bundesbank, said that any deal struck between the UK and the European Union following Brexit would be “miles away from access to the single market”.

He was speaking in a private briefing for German businesses and banks earlier this week. His comments were first reported by the BBC.

Banks in the City of London have long argued there is no alternative to membership of the single market that provides the same level of certainty or access. However, the UK Government last month ruled out retaining single market membership following Brexit.

Access is therefore likely to come through “equivalence” – a deal whereby UK-based financial firms could sell their services to customers in the EU as long as the UK maintained a regulatory regime “equivalent” to that in Europe.

A number of UK-based firms have also said that they will need to set up subsidiaries within the EU. However, their location and the number of jobs likely to be moved to them from London is a matter of fierce debate.

According to the BBC, Dr Dombret laid out a hard line at the event, organised by the Boston Consulting Group in Frankfurt. He said: “The current model of using London as a gateway to Europe is likely to end.”

The Bundesbank executive, who is responsible for banking and financial supervision, also appeared to react to implicit threats by Philip Hammond, the Chancellor, who earlier this month said that the Government could employ other means to ensure the economy remained competitive – taken to suggest that the UK could reduce corporation tax and regulatory burden.

“The EU will not engage in a regulatory race to the bottom,” said Dr Dombret.