The European Union must drop its hardline approach to relations between the City and the continent after Brexit, a cabinet minister has warned.
The EU insists London’s finance sector must be closely-tied to the bloc’s own regulations in order to grant market access post-Brexit, despite calls for a more wide-ranging and preferential deal in light of the City’s links with businesses across Europe.
Brexit secretary Steve Barclay told City A.M. that negotiators in Brussels should learn from China, which this week confirmed a link-up between stock markets in Shanghai and London, instead of pursuing higher regulatory barriers.
Speaking after a visit to the London Stock Exchange, Barclay said: “On the one hand they say we won’t give you equivalence, we want you to follow the rules, but they also say we can’t guarantee you access to the markets.
“There’s an inconsistency between the approach to other jurisdictions where equivalence is offered and an approach to the UK which, at the moment, appears to be to put up the barriers that even the Chinese are taking down, or to say that we won’t guarantee equivalence whilst also saying while we start from the point of equivalence there cannot be access to European markets.
“I think some of those issues are counter-productive because they’re not in the interests of EU consumers and businesses.”
He added: “It would be odd if the EU were putting barriers to their businesses accessing capital in London at the same time as the Chinese were taking those barriers down, and I would argue the same reasons driving the Chinese decision should also drive the EU decision.
“I think these are the sort of areas that need to be discussed as part of any renegotiation or any contingency planning around no deal.”
Barclay, who is backing Boris Johnson in the race to succeed Theresa May, also warned whoever becomes the next Prime Minster that opposition to the three-times defeated withdrawal agreement has only hardened in parliament, and a new approach was needed to get a Brexit deal secured before 31 October.
“The first question will be: Can any concessions be agreed because both sides recognise the importance of a deal?” said Barclay.
Barclay joined the cabinet in November 2018, but could soon find himself out of a job when the new prime minister announces his top team once the leadership contest is concluded at the end of July.