It’s not all doom and gloom in politics. For those worried that the Brexit negotiations will result in a bad deal for the UK and the City of London, you will be pleased with this latest news.
Two weeks ago, a report from the European Parliament’s influential Committee on Economic and Monetary Affairs (Econ) was leaked to the Guardian. The Guardian are reporting that the European Union will be just as damaged as the City of London’s economy if the UK does not work out a workable Brexit deal.
The report allegedly highlights that UK-based financial services account for 40% of Europe’s assets under management and 60% of its capital markets business. Additionally, UK-based banks provide more than £1.1tn of loans to the other EU member states. Essentially, as the main European financial centre, the City of London is integral to the EU’s economy.
It goes on to warn that excluding the City of London from the EU internal market could have serious consequences for jobs and growth across all EU member states.
This chimes with some other rhetoric coming out of the EU. Even as far back as August 2016, Michael Roth, Germany’s European Affairs Minister, said that “Britain’s size, significance and its long membership of the EU” means there “will probably be a special status” for the UK post-Brexit.
At the time of his comments, many were sceptical that the UK would be given any leeway, and that instead the UK was going to be punished to set an example to the rest of Europe. As time goes on, there seems to be a continued softening rhetoric towards the UK and Brexit coming out of the rest of Europe.
In January 2017, Michel Barnier who is the European commission Brexit negotiator, also offered a hint of compromise. Barnier indicated that the City would have a “special relationship” and that “there will need to be work outside of the negotiation box … in order to avoid financial instability.”
Over the weekend, German Finance Minister Wolfgang Schäuble commented to a German magazine, that Brexit needed to work for UK as well as EU. He explained that the EU should recognize the benefits that the City of London provides to it by pursuing a “reasonable” deal with the UK.
This report from the European Parliament’s Committee on Economic and Monetary Affairs echo’s Roth’s, Barnier’s and Schäuble’s sentiments and will definitely be welcomed by the City of London. There’s clearly still a lot of negotiating to do, but this should definitely be seen a glimmer of light at the end of the tunnel.
Authored by Helen Roberts