A Conservative MP and former banker has warned that the government must be braced for the EU to "play hard on financial services" as we move into the next phase of Brexit negotiations.
Bim Afolami, who became an MP last year having previously been an executive at HSBC, last night told attendees at a Politeia discussion that the negotiation was a "highly political process" and the UK should be prepared to deliver a credible threat of deregulation if the EU refuses to compromise, Politico reports.
“We have to prepare for the eventuality that the EU really plays hard on financial services. They know it is an area where they can sting the UK,” Afolami said. This would mean either following EU rules or going head-to-head with would-be competitors.
“Are we brave enough to say, if you don’t allow us access to markets, we are going to compete — aggressively," he said.
Business groups and City representatives have repeatedly said they do not want a "bonfire of the regulations" after Brexit, and the EU's chief negotiator Michel Barnier has previously warned that it would scupper any hope of a long-lasting deal with the bloc.
But fears are growing that the EU is not minded to give the City a bespoke deal, with reports yesterday suggesting that the blueprint for a future trading relationship, put forward by the International Regulatory Strategy Group (IRSG), had been rejected because it was incompatible with the government's desire to leave the Single Market.