Ivan Rogers: Brussels negotiators thinking "what business can they suck out of London"

 
Catherine Neilan
Follow Catherine
BRITAIN-POLITICS-EU
Source: Getty

The government will struggle to stop EU officials trying to break up the City after Brexit, the UK's former ambassador to Brussels has warned.

Ivan Rogers, who resigned earlier this year, told the Treasury Select Committee that many EU negotiators are unwilling to maintain close links between London's financial sector and businesses across the rest of the continent.

The case must be made for why fragmentation of the City's financial services would be bad for Europe, and may result in other territories in Asia, America or the Middle East winning, Rogers said. But he claimed this was "a hard sell" because the people at the negotiating table were "not very immersed in financial services".

"Leaders' officers and the people who are doing this negotiations sometimes can think in really quite mercantilist terms of 'What’s in it for us, what business can they suck out of London and where’s our competitive advantage here?'", he said.

"We have to raisethe tone and tenor of it and say '20 years hence where do want to be?'"

Rogers said government must find an "elegant way to exert leverage", given that an FTA would most likely be based on the Canadian model, which is "biased" towards goods and manufacturing but doesn't address financial services.

David Davis and team need "creative way of articulating why it's very much in the EU27's interest not simply to suck more business" out of the City and into European capitals.

The case must be made for why fragmentation would be bad for Europe, and may result in other territories in Asia, America or the Middle East winning, Rogers said.

The ambassador revealed that he strongly argued last autumn against rushing to trigger Article 50, saying the UK would be "screwed" on sequencing if it did so. He felt the EU would be able to dictate the chronology of discussions to such an extent that it could put a large financial demand on the table, and then refuse to move until the UK agrees to it.

"I did say I would not agree unequivocally to invoke Article 50 unless you know how Article 50 is going to work," he told MPs.

The former ambassador told the committee he expected EU leaders to ask the UK to contribute to "the reste a liquider", or overhang commitments in the EU budget, which they estimate at around €30bn. But the government will argue that these are long-term commitments for which the UK is not responsible.

Rogers, who stressed trade talks could not begin until after the UK leaves the bloc, suggested the EU would dismiss May's call for a "bespokse, unique and specifically British" deal, saying the Canadian deal was most likely.

Rogers also warned that talks could disintegrate so badly it could result in "a trade war".

"All trade deals in history have been struck between partners trying to get closer together, this is the first deal in history struck between partners trying to get further apart."

Meanwhile, HMRC boss Jon Thompson this afternoon told MPs he would need £400m and between 3,000 and 5,000 additional members of staff to prepare for a Brexit with no deal.

The department has already been given £78m from the £250m set aside for contingency planning, but Thompson said he was likely to ask for “significantly more” next year.

He told Public Accounts Committee: “It will be several hundred million pounds if we are implementing the option of the United Kingdom leaving the European Union with no ongoing special relationship in April 2019.

“That is the most extreme version, I think, of leaving the European Union. In that scenario you are looking at an estimate of between £300-£450m.”

More to follow

Related articles