One of the EU's top commissioners jets into London this morning for a whirlwind pre-Brexit tour of the capital, telling City A.M. that a future deal on financial services must "work for all".
Valdis Dombrovskis, vice president in charge of financial services, said the European Commission would not set out to “punish” the UK during Brexit negotiations.
He also backed London to retain its status as a “substantial financial centre” beyond Brexit.
Dombrovskis was handed the vice president position after the UK's commissioner Lord Hill quit last summer. Today, the former Latvian Prime Minister pays his first visit to London since taking on the financial services brief.
He will meet chancellor Philip Hammond later today before attending an event with top banking bosses and other City figures. Tomorrow, he will open the London Stock Exchange before meeting fund managers and talking at a fintech event.
Hammond will discuss financial stability with Dombrovskis, and stress the need for an orderly transition towards Brexit.
The visit comes at a time when European leaders appear to be accepting that the UK’s financial services industry needs to be protected in Brexit negotiations for the good of other EU countries.
“We must work towards a solution which eventually works for all,” Dombrovskis told City A.M. at the EC headquarters in Brussels.
“Our aim certainly is not to punish the UK,” he added. “We have to respect the choice of British voters, and as I said we will certainly enter the negotiations with the aim to reach agreement which feeds all: which feeds EU 27 and feeds the UK.”
His words seem to echo the view – increasingly voiced on the continent – that European businesses will suffer if London is harmed by Brexit talks. Germany’s finance minister, Wolfgang Schauble, said over the weekend that the EU would need to offer a “reasonable” deal to the UK, citing the financial centre’s role serving the European economy as a whole. Elsewhere, a report from the European parliament’s committee of economic and monetary affairs warned against a “badly designed” deal that could damage the City.
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Asked whether the UK is likely to remain a global financial centre, the largest in Europe, Dombrovskis said: “Of course there will be implications on how business will be done with the EU because there is still the process of equivalence, establishing sufficient presence in the EU to actually get the EU passports. But certainly one can expect the City continuing to be a substantial financial centre.”
Dombrovskis also told City A.M.:
- The EC is exploring options for how UK financial services firms can maintain strong ties with EU nations when Britain leaves the Single Market and loses passporting rights. Dombrovskis said: “Equivalence is certainly one of the options we are looking at. Another is of course also for industry to establish a substantial enough presence in the EU to maintain the EU passporting.”
- The EC, with the European Central Bank, is considering whether an intervention should be made to attempt to strip London of its place as the global centre for euro-denominated clearing.
- As the US reviews Dodd-Frank, the EC will not be moving “towards deregulation”. Dombrovskis said: “And this is a signal we are sending to our US partners.”