Brexit master plan as City of London could join forces with Amsterdam to take on EU
Brexit: UK 'remains as a top financial market' says Powell
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The Governor of the Bank of England, Andrew Bailey, has said he does not expect the EU to open the doors to UK financial services exports after Brexit. He told a news conference earlier this month: “On equivalence, I think it’s fair to say that nothing really has moved forwards.” After months of wrangling, new rules for trade were finally agreed on Christmas Eve last year but in a document spanning over 1,200 pages, there was very little mention of financial services: a sector which 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 gloomy remarks echo comments made by Chancellor Rishi Sunak who recently said that a financial services deal between the two blocs “has not happened” – despite the Brexit transition period ending over six months ago.
The UK has recognised equivalence for the EU in several financial service activities, but these have not been reciprocated in Brussels.
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.
he French sent constant delegations to London to tour boardrooms, while Frankfurt was setting up special schools for all the banking families making the move.
Already in January, though, it became clear that Amsterdam was winning the race.
In January, Amsterdam overtook London as Europe’s largest share trading centre.
An average €9.2billion (£8.07bn) shares a day were traded on Euronext Amsterdam and the Dutch arms of CBOE Europe and Turquoise in January, a more than fourfold increase from December.
The surge came as volumes in London fell sharply to €8.6billion (£7.5bn), removing the UK from its historic position as the main centre for the European market, according to data from CBOE Europe.
While it is of course a shame that lots of trading is being forced out of Britain, in a recent report, financial columnist Matthew Lynn, argued there is also a natural opportunity for the City.
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He wrote: “We should create a twin city financial hub – Lon-Dam.
“How would that work?
“Amsterdam would handle all the trades and listings which the regulations demand are completed within the EU, while London, as well as re-focusing on the global capital markets, could keep much of the high-level deal-making and research work.
“With similar buccaneering, global traditions, it should be a natural fit – and with the right infrastructure in place, Lon-Dam could be one of the great financial centres of the 21st century.”
France in particular was determined to make Paris the major winner from the UK’s departure from the EU, Mr Lynn noted, so the Dutch shouldn’t be surprised if “there were rule changes to undermine Amsterdam’s new-found prominence “.
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The financial columnist concluded in his report for The Telegraph: “If both cities play it right Lon-Dam could be one of the great financial centres of the 21st century.
“With similar rules, and lots of traffic in people and ideas, it could sit naturally between New York and Shanghai, channelling capital into and out of Europe, and sticking to the EU’s rules while at the same time preserving the dynamism that made the City a thriving financial centre.
“Sure, it will annoy the politicians in Frankfurt and Paris – but the economies of both Britain and the Netherlands will benefit hugely from rebooting one of history’s great partnerships.”
In an exclusive interview with Express.co.uk, Italian MEP Antonio Maria Rinaldi 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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