EU holds City of London ransom: Brussels threatens UK with financial services blockade

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Commissioner Mairead McGuinness said she is under no pressure to fast track negotiations with the UK to help British bankers and fund managers. She said eurocrats are still finalising the details of a recent memorandum of understanding for future regulatory cooperation. The pact agreed last month between London and Brussels will pave the way to the creation of a forum to closely manage post-Brexit financial services trade.

Ms McGuinness told Bloomberg: “I know there probably is an appetite on the UK side for us to sit down and get going.

“We are certainly very keen to do that, but we’re not under pressure to do it.”

Ireland’s top eurocrat insisted the EU’s priority was its own financial services markets.

She said the bloc would scrutinise Britain’s plans to move away from its rulebook in the future before making any final decisions to grant access.

“There isn’t any haste here,” Ms McGuinness said.

“There is no pressure. There is no panic.”

After the end of the Brexit transition period, City of London financial firms have not had free access to the EU’s markets.

Banks, like JP Morgan and Goldman Sachs, have had to move billions of pounds in assets and thousands of staff to the Continent as a result.

The post-Brexit trade agreement largely ignored the financial services sector, and since its signing, the EU has not attempted to fast track talks over the industry.

Brussels has also said it is not in a rush to grant a so-called “equivalence” agreement that would return British firms’ rights to operate in the bloc.

EU nations, including France, have previously called for the bloc to use Brexit in order to bolster its financial services market.

They want to steal business away from London by restricting the City’s access to the sector in Mainland Europe.

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But industry leaders in Britain believe attempts by Brussels to squeeze them will be futile.

Karim Haji, head of financial services at KPMG, said: “It’s not that if we don’t have an equivalence deal things will suddenly stop working or become very difficult.

“I don’t believe that at all, and actually most of the clients I talk to definitely recognise that.”

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Mr Haji insisted the City of London would remain a world leader with or without an EU equivalence agreement.

He added: “If you take a step back, the UK has been one of the leaders in financial services regulation and infrastructure, it’s one of the key innovators in the space as well, and one of the leaders in the world, and that’s why the UK has been successful in exporting financial services – that isn’t changing as a result of Brexit.

“The regulatory regime that we had before Brexit and today is by and large the same, and many of the regulations that we talk about in terms of EU regulations, the UK was not only an active participant, but quite a leading thinker, and the relationship between the UK regulators and the European regulators is still strong, so I think that there are lots of positives.”

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