Wednesday, August 15, 2018
Business

The European Union will benefit from a City Brexit deal

French President Emmanuel Macron made quite an impression during his brief visit to the UK last week.

Not since the visit of President Obama in 2011 has the British media been quite so excited about catching a word from a visiting politician. Angela Merkel may be a step closer to forming a government (Berlin watchers think one could be in place by Easter) but she has vacated the role of supreme European leader and Macron has seized the crown.

When it comes to Brexit, senior government figures talk privately of Merkel “no longer being on the pitch” as the wheels and machinery of British diplomacy are turned towards France.

Read more: Macron says a special Brexit deal for the UK is possible

In that context, Macron’s musings on Brexit are taken seriously. As well they should be. But this is a sensitive time for the EU, when the unity of the negotiating position will be tested. As negotiations move from transition to trade, national interests will come to the surface – and Michel Barnier, the EU’s appointed chief negotiator, will find himself haggling with the heads of member states as much as he will with the British government.

Barnier’s mantra that there is no deal on offer for UK financial services was tested by Macron who said over the weekend that a bespoke trade deal is on the cards, albeit with preconditions and limitations.

Such is the risk of an EU leader contradicting Barnier, the French embassy in London rushed out a statement clarifying the President’s remarks and putting him back into line alongside the EU’s official negotiator. Nevertheless, as we explore on page eight today, a deal including financial services is (in the words of Bank of England deputy governor Sam Woods) eminently achievable.

Read more: City of London chief says there will be fewer Brexit job moves than thought

The obstacles are political, but the risks associated with not achieving one are very real – for the EU as much as the UK. While a slow bleed of London’s financial infrastructure and jobs remains a risk (albeit it, an avoidable one) over the long term, the priority for both sides in the current negotiation must be to safeguard sufficient and sufficiently frictionless levels of access.

European businesses depend upon it. The City remains, as Mark Carney put it, Europe’s investment banker. It should be prioritised by UK negotiators and valued as a European asset by EU officials.

Original Article

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