The City of London can expect financial services trade with the EU to be “less fluid” from January onwards, the bloc’s new finance commissioner has said.
Speaking to the European Parliament, Mairead McGuinness also reiterated the EU’s position that its banks and financial services companies should move away from reliance on London.
The UK officially left the EU in January. But it is in a transition period that keeps the relationship the same until the end of this year.
Britain and the EU are locked in tense negotiations about a free-trade agreement. The UK is currently trying to pass legislation that goes back on parts of the Brexit agreement struck last year.
Negotiations on financial services are being done separately, but there have been tensions there too. Both sides missed a deadline in June to agree rules on future financial trading.
Today, McGuinness fired a warning shot, highlighting that the relationship is set to change no matter what happens.
“Under all circumstances, deal or no deal, trading in financial services will be different and less fluid as of the first of January next year,” she said.
She also said: “We need to avoid being overly dependent on a third country for key financial services.”
UK and EU show progress over financial services
Her comments came during a parliamentary hearing about her appointment as financial services commissioner. If she is confirmed, McGuinness will lead discussions over the City of London’s access to the EU.
There has been some progress on financial services. The EU has allowed its banks to continue to use London clearing houses until mid-2022, in a sign of the City’s importance to the bloc.
However, EU officials are encouraging banks to cut their reliance on London. Last week EU trade chief Valdis Dombrovskis said the bloc’s banks should reduce their “excessive exposures” to London’s derivatives clearing houses. McGuinness’s comments today echoed that sentiment.
More than 7,500 UK finance jobs have headed for Europe since the 2016 EU referendum, a report showed yesterday. More relocations are expected as the transition period ends.
In September alone, financial services firms moved more than 400 jobs, according to professional services firm EY.