Finance minister Pierre Gramegna warned Downing Street could forget securing long-term access to the European Union’s financial markets for British bankers while demanding complete sovereignty. He suggested the Government would have to sign up to swathes of the bloc’s rules if it wants to secure stability for City of London investors and bankers. With Britain set to leave the single market at the end of the year, the UK and EU have agreed that future financial services access should be based on the “equivalence” system.
The scheme allows either side to judge whether the other’s regulations are up to scratch before granting market access to their financial services companies.
Around 40 equivalence provisions are scattered across the EU’s financial regulations.
Brussels can unilaterally withdraw the market access with as little as 30 days’ notice.
Michel Barnier, the EU’s chief Brexit negotiator, has previously accused trying to achieve the right to “co-decide with the Union” in an area where the bloc wants to be autonomous.
Boris Johnson told to compromise to secure stable access to EU’s financial markets
Prime Minister Boris Johnson
Mr Gramegna told the Financial Times: “The United Kingdom is promoting an enhanced equivalence system which to a certain extent I can understand. On the other hand, I understand also the European Commission saying we want to keep our independence in what we do.”
He claimed the UK was making requests that are difficult for the EU to consider.
He added: “The UK at the same time says ‘as soon as we will be out we will be 100 percent sovereign and be able to choose what we do with our own regulation’.
“That sounds to me in contradiction with the idea of having enhanced equivalence. You cannot defend the two things in parallel.”
Luxembourg finance minister Pierre Gramegna
The Luxembourgish minister, who is vying to become the next Eurogroup president, hinted that Britain should lose its right to host lucrative businesses clearing euro-denominated derivatives.
“I’ve heard the positions of both sides,” he said.
“But it’s clear that by exiting, the UK loses an important argument to be hosting this clearing capacity.”
He added: “To me it is obvious that it is less natural to have it in the UK than when the United Kingdom was a member.
Michel Barnier is the EU’s chief Brexit negotiator
“What is really important is that the place where it’s being done has the financial stability and clout to do this clearing business… You need to be a huge financial centre, very strong to be able to cope with that risk.”
Last week the EU and UK both missed their pre-agreed deadline to have separate equivalence reports completed.
But the Treasury hit out at Brussels for delaying the process after submitting more than 1000 pages of questionnaires.
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A spokesman said: “Both sides committed to completing equivalence assessments ahead of the summer.
“As the UK and EU start from a position of having similar financial services regulation this should be a straightforward process.
“The UK has been able to complete our own assessments on time and we are now ready to reach comprehensive findings of equivalence as soon as the EU is able to clarify its own position.”