The City's importance to Europe helps Prime Minister Theresa May and the Brexit negotiations

 
Christian May
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Brexit Fears Continue To Hit Financial Markets
Several cities, including Frankfurt and Dublin, are looking to capitalise on Brexit to boost their own financial centres (Source: Getty)

Listen carefully, and you can hear plenty of sensible European voices contributing to the great Brexit debate.

Germany’s European affairs minister, Michael Roth, said recently that “Britain’s size, significance and its long membership of the EU” means there “will probably be a special status” for the UK post-Brexit.

At the time, he was dismissed as a loose cannon by those determined to believe the UK was in line for a punishing deal.

Read more: MPs just voted overwhelmingly to back an Article 50 Bill

In reality, he echoed Markus Kerber, another pragmatic German and head of the country’s top business lobby group, who warned before the referendum that “imposing trade barriers, imposing protectionist measures between our two countries would be very, very foolish”. He went on to call for an EU negotiation strategy that maintained the current levels of trade enjoyed between the UK and Germany.

The political masters of the EU project (whose influence in upcoming negotiations should not be underestimated) have, by contrast, preferred to fire warning shots across British bows, claiming that the UK cannot “cherry pick” aspects of EU membership.

Read more: Hurting the City will hurt the EU too

To be fair to Theresa May, she isn’t trying to. In her landmark Brexit speech she recognised that the four freedoms of the EU were indivisible and said she would not seek to pull at the threads of them. To paraphrase, her position was that “we know we cannot have controls over freedom of movement while maintaining full membership of the Single Market, so we do not seek it”.

It was a pragmatic approach, and one based on the fact that the UK does not enter the negotiations as a weak, peripheral EU member. We will not be holding out the begging bowl.

EU officials are, quietly, starting to recognise this.

Read more: Remain-backing lobbyist now says Brexit is once-in-a-generation opportunity

Michel Barnier, the EU’s chief negotiator, understands – particularly as it relates to the City of London, to which the EU’s financial interests are so closely linked.

Now a leak from the European parliament reveals yet more powerful voices waking up to this reality. The economic and monetary affairs committee’s paper warns: “Given the considerable interdependence between the UK and the EU economy and financial systems, it is critical that a workable agreement is achieved.”

The leak provides fresh evidence of the importance of the City to EU financial stability, and it will strengthen the hands of the UK’s negotiators.

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