Brexit: UK 'remains as a top financial market' says Powell
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Last month, the Governor of the Bank of England, Andrew Bailey, said the City of London should not expect the EU to open the doors to UK financial services exports after Brexit. He told a news conference: “On equivalence, I think it’s fair to say that nothing really has moved forwards.” After months of fraught negotiations, new rules for trade were finally agreed at the end of December.
However in a document spanning over 1,200 pages, there was very little mention of financial services: a sector that accounts for seven percent of the UK’s economy and 10 percent of its tax receipts.
Without this recognition, London firms will be blocked from gaining access to the market.
The EU’s intransigence is not a major surprise as ever since the UK decided to leave the bloc, major European capitals such as Paris or Frankfurt have tried to take the City’s place as Europe’s financial centre.
According to financial columnist Matthew Lynn, though, it has become clear the EU has miserably failed in its intent.
He explained: “No more than a handful of jobs have drifted away, and most of those that have are simply ticking a few boxes to comply with the rules, while only this week London has started redesigning its listing rules to encourage more tech floats.”
In fact, Mr Lynn insisted, the EU has played its hand in an appalling way.
He continued: “Why did it go so badly?
“First Paris and Frankfurt, along with the Commission officials in Brussels, put way too much faith in rules and regulations.
“As so often, they appeared to believe they could simply legislate their way to commercial success. If they just put enough restrictions on trading, and came up with the right kind of laws, then the financiers would have no choice but to move.
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“And yet most of those rules can be easily worked around. If trades need to be executed through a computer somewhere else it is nothing the IT department can’t fix in a few days, while if a partner needs to be dialled into a conference call from a different European city that can be arranged at little extra cost.”
Even worse, Mr Lynn added, when business couldn’t be done in London, it could be switched to New York – which has market access – instead.
He concluded in his report for The Telegraph: “Next, it was all carrot and no stick.
“The really bold move for Paris, Frankfurt or Amsterdam would have been to carve out a financial free trade zone, with lower taxes, easier employment rules, and lighter regulation (in effect, a bigger Monaco).
“Now that would have been a threat.
“But Brussels has long since forgotten that business needs incentives. It sticks rigidly to the dogma that threats are always enough.”
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In an exclusive interview with Express.co.uk, Italian MEP Antonio Maria Rinaldi echoed Mr Lynn’s claims, as he insisted the City will come out stronger thanks to Britain’s withdrawal from the bloc.
He explained: “The City will be even more powerful thanks to Brexit and for a very simple reason: the markets there are much faster and smarter.
“The EU can put up whatever imposition it wants but in the end it is the competition of the markets that will triumph.
“And since the tradition of the City is superior to any other place, it will remain the main European financial centre.”
He added: “I wouldn’t worry that much… they said five years ago that Brexit was going to be an apocalypse.
“I think it has been a godsend, instead.”
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