Luxembourg's finance minister has warned EU leaders that taking a hard line approach towards a Brexit deal risks letting the City “drift away into the Atlantic”.
Pierre Gramegna urged leaders to strike a collaborative accord allowing the “number one financial centre in the world” to stay well connected to Europe.
“I think that it is key for Europe – and I mean Europe with the UK – that the number one financial centre in the world remains in Europe. And in order to achieve that, we must make sure that we harness the City of London to Europe, to the continent,” he said during a lecture at the London School of Economics yesterday evening.
“And by doing so we will make sure that London can continue to perform well.”
Citibank and JP Morgan are among a number of large financial institutions to have selected Luxembourg to set up a new EU base so that they can sell services on the continent post-Brexit. AIG and Lloyd’s stalwarts Hiscox and Liberty Specialty have picked the Grand Duchy.
He said he wanted London and Luxembourg to work hand in hand for mutual benefit.
“We want a co-operative approach with London as a financial centre,” he said
Gramegna admitted there were some EU countries that wanted to “punish” the UK for its decision to leave the union in the hope of getting a “bigger of the pie” with respect to the global financial services sector.
He labelled such a stance “a very short-term reason”.
“My guess is that in many areas we might be able with no deal to weaken London. But it is not the European financial centres that are going to benefit from it. It is going to be others outside the EU and what we are going to see London drift away into the Atlantic.”