We cannot put up a wall around UK Financial Services after Brexit – Hayes
“Punishing the UK from an EU perspective would be destructive and self-defeating”
Brian Hayes MEP, during the first European Parliament delegation to the UK since the Brexit referendum, said that the European economy will suffer if there are major barriers for the City of London. Punishing the UK after Brexit would be a destructive and self-defeating game that the EU must not play.
Mr. Hayes, along with EPP MEPs on the Economic and Monetary Affairs Committee, met with Chancellor Hammond, Bank of England Governor Mark Carney and key representatives of the UK financial services industry.
“The UK holds for 40% of Europe’s assets under management and 60% of its capital markets business, and UK-based banks provide more than £1.1 trillion of loans to the other EU Member States. Essentially, the City of London is the biggest financier of the European economy. The reason that these funds can be channeled into the EU economy is because of passporting rights and single market access.
“A hard Brexit would put in jeopardy the way we fund the EU economy. This means that European banks, SMEs and manufacturers could find it difficult to access capital.
“Putting a wall up around UK financial services will be detrimental to Ireland especially. Over half of Ireland’s exports in financial services to Europe goes directly to the UK every year. Ireland has serious opportunities to attract financial services firms in light of Brexit. However, we do not want to see a whole swath of the financial services industry pull out of the UK. We need a strong City of London as both of our financial services centres are interlinked.
“I made these points to Chancellor Hammond yesterday when he met with our delegation of EPP MEPs. The issue of financial services is one key area that Prime Minister Theresa May left relatively untouched in her recent speech on Brexit.
“I’ve been very impressed by the clear interaction between the IDA, Irish government Ministers and our diplomatic mission in making the case for Dublin and Ireland in the City of London.
“A bad tempered divorce and protracted divorce is in no one’s interest. What is needed now is certainty. In fact were no deal to emerge it could present a new risk to the fragile and interconnected financial markets that exist in the UK and the EU.
“Britain is leaving the EU and the EU needs to establish after Brexit a solid new relationship with the UK especially in the area of financial services. Equally the UK must show good faith in applying regulation that cannot be interpreted as a race to the bottom. It is clear from my conversations with the Governor of the Bank of England to the Chancellor that the UK will not be applying light touch regulation. A clear commitment to the post financial crisis legislation remains.
“The issue of what type of access the UK gets to the single market is an issue that will likely be decided by the end of 2018 through the divorce settlement. It is in Ireland’s interest to ensure that the City of London remains strong and retains the ability to fund the European economy. Whatever the ultimate deal, I believe we need to look for a formal cooperation agreement between the EU and the UK on financial services.
“No other financial services centre in the EU has the same capacity to fund the European economy. And we must recognise that, as it stands, the City of London is key to the growth of the whole Union.”