The UK’s former financial services commissioner to the EU has warned the City of London that Brussels is trying to overturn its status as a leading global financial centre.
Lord Jonathan Hill, who also served as a minister under David Cameron, said the EU would “not do us any favours” and that it was certain Brussels will not allow full market access for UK financial firms.
Speaking to the Financial Times, he said: “Given that their strategy is to build up the EU, why on earth would they?”
The UK’s financial services sector lost its pre-Brexit access to EU financial markets on 1 January, with firms now having to either set up bases in Europe or negotiate a patchwork of regulations from individual countries.
Major UK-based banks have moved more than £1 trillion of assets and thousands of jobs to EU financial capitals to avoid disruption.
The only way the City of London can regain its pre-Brexit access to the EU is if Brussels grants regulatory equivalence across 40 areas, however Brussels believes the UK is destined to diverge from its financial services regulations and has withheld the designation.
Brussels did grant equivalence for UK clearing houses to continue operating in the EU, which was considered necessary to protect financial stability.
Hill said the EU has so far failed to make much headway in displacing London as the continent’s top financial centre.
“The hopes my old European mates had that this would lead to the re-emergence of a European capital markets centre to compete with London has not happened,” he said.
“The bits of business that have left London have fragmented across Europe – to Amsterdam, Brussels, Frankfurt, Paris, Dublin. That says our competition is American and Asia so let’s see what they are doing.”
The UK and EU are currently holding “memorandum of understanding” talks that will guide future regulatory cooperation on financial services.
Industry insiders close to the talks told City A.M. earlier this month that any agreement struck will only provide minimal access to EU markets at the absolute best and will more likely only set up a method for UK and EU regulators to swap information on decisions.