Dominic Raab dismisses EU threat to City of London
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The European Commission’s financial services chief said Brexit had “laid bare” the Continent’s dependence on the City. Mairead McGuinness warned the bloc required a major rethink to “reinforce its capacity and suggested delaying a decision to grant UK firms greater access to its market could be used for the rebuild. But the Irish eurocrat insisted the move was underpinned by concerns over financial security rather than a bitter grab for the City’s business in the wake of Brexit.
The EU is currently in the process of considering granting so-called “equivalence” to the UK’s financial services market.
Under the scheme, Brussels would agree that our financial regulations are as robust as the bloc’s to enable better access to its markets.
Ms McGuinness said: “Where possible, we want to limit the concentration of critical infrastructures located outside the EU.
“Our goal is not to move or steal business away from London but rather to build our own infrastructure, and that’s an important nuance.”
Brussels has so far dragged its feet on any equivalence decisions despite warnings further delays could harm the bloc.
City chiefs believe eurocrats are holding out on a decision in the hope that more banks relocate staff and assets to the Continent.
Many financial services firms have moved some of their operations to mainland Europe but claims of a post-Brexit exodus from the City have not come true.
Ms McGuinness warned equivalence decisions will not be made until a UK-EU memorandum of understanding on financial services is officially signed off by member states.
The UK and EU agreed in principle to the MoU, which will set out how both sides will co-operate and share information for financial services.
“When we do resume on our assessments, we would do so gradually, and on a case-by-case basis, taking into account the UK’s regulatory intentions and, of course, the EU’s interest,” Ms McGuinness said.
“Again, trust will be paramount.”
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The official also warned the EU’s financial services policy was “not isolated from the wider political relations”, which could be poisoned by various post-Brexit spats between the two sides.
She has previously warned Brussels would limit Britain’s access to the EU’s financial services market if there is a bonfire of regulation for the City.
City minister John Glen has said the UK is powerless to influence how the EU “will make those determinations” on access.
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He added: “In the meantime, I will just continue and the Government will continue to look at what’s the best way to regulate our financial services industry in the context of global relationships where a lot of growth is happening outside of the EU.”
Earlier this year Bank of England governor Andrew Bailey accused the EU of implementing a “location policy”, warning MPs that the bloc could force banks to move activity to the Continent through legislation.
He said this would trigger a “serious escalation” of tensions between the two sides.
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