Michel Barnier has signalled Brussels will not climb down from its demands of the UK if a post-Brexit financial services deal is to be secured, as figures show a business hit already for the City of London.
Mr Barnier, who was the bloc’s chief Brexit negotiator, told a business summit in Brussels the EU still needs further clarification from the UK before making a decision on financial services equivalence.
It is crucial if UK operators are to be granted access to the EU market after so-called passporting rights were lost on 1 January.
He made his remarks hours after the governor of the Bank of England, Andrew Bailey, warned that the EU’s demands of the UK on future rules – currently aligned with those of the European Commission – were excessive compared to international standards.
Mr Bailey had already rejected the notion of the UK becoming an EU rule-taker and repeated that assertion in his virtual address to financial executives on Wednesday evening.
Brussels is keen to expand its own financial services sector, that had been dominated by London throughout the UK’s membership of the EU.
But it is fearful of a bonfire of red tape that would make the City and wider financial services industry more competitive.
The status quo has already resulted in a blow to the Square Mile.
Statistics first reported by the Financial Times confirmed that London had last month lost its crown as Europe’s largest share trading centre to Amsterdam.
Data from Euronext Amsterdam and the Dutch arms of CBOE Europe and Turquoise showed a fourfold increase in average daily trades there compared to the previous month when the Brexit transition period neared its end.
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Separate figures from IHS Markit showed that London’s share of euro-denominated interest rate swaps had fallen to just over 10% of the market from 40% with platforms in Amsterdam, Paris and New York – an EU-approved centre – netting the business.
Any recovery of the work for London may depend on any equivalence deal – with talks seemingly stumbling and commentary around them becoming more fractious.
Boris Johnson’s spokesman said: “Despite the fact that we’ve supplied all of the necessary paperwork and are one of the world’s most pre-eminent financial centres, with a strong regulatory system, the EU still haven’t granted us full equivalence.
“This has meant a number of EU shares that were previously traded on UK venues, have moved to the EU venues on advice of the European regulator, but our position is fragmentation of share trading across financial centres is in no one’s
Mr Barnier also used his remarks to repeat a warning that member states should watch for possible circumvention of the current rules by UK financial services firms.
“The EU national authorities will be very vigilant in the next weeks,” he said. “I recommend everyone to be careful.
“I can just repeat that the equivalence decisions are and will remain unilateral of each party and are not subject to negotiation.”