British trade negotiators will fail in their efforts to isolate the City of London from the worst consequences of Brexit, Michel Barnier warned of a meeting of finance chiefs on Tuesday.
The EU chief negotiator said that British demands in the ongoing trade talks in Brussels are unacceptable and that the UK’s plans to abandon EU financial regulation risk another crisis that could damage the blockade.
The UK proposals would make it easy to continue running EU businesses from London after the end of the transition period on 31 December and would prevent the EU from freezing UK financial services from the single market on short notice.
“I will be straightforward. His proposals are unacceptable,” he said as negotiations continued in the Belgian capital, “The UK is trying to maintain as many benefits as possible on the single market.”
London remains the main European financial center, but this status is coveted by Paris, Amsterdam and Frankfurt, which hope to profit from Brexit.
“[The UK] would like to facilitate the continuation of EU business management from London, with minimal operations and staff on the continent, “said Barnier.
“He wants to ban residency requirements for executives and boards of directors to ensure that all essential functions remain in London,” he added.
“We are asking for agreements such as those agreed by the EU with Japan,” said a UK spokesman, “Japan is not in the single market.”
UK financial services lose their EU “passport” in the single market at the end of the year. Brussels insists that future access will be based on equivalence, a regulatory approval system which can be unilaterally withdrawn by the European Commission and in some cases with just 30 days’ notice.
British negotiators asked for a joint committee on equivalence decisions, which Barnier said was attempting to turn unilateral decisions into co-managed decisions.
“These are autonomous and unilateral instruments. And as such, they are not part of our ongoing negotiations, “said Barnier.
Last year, the commission froze Swiss stock exchanges out of the single market in an attempt to force Bern to return to the negotiating table on a new treaty governing their relations. London and Bern on Tuesday said they would begin negotiating a bilateral financial services agreement.
Barnier was commissioner for the internal market during the financial crisis and was responsible for much of the post-crisis regulation introduced by Brussels after 2008.
Barnier told the Eurofi think tank that the UK planned to abandon EU financial services regulations after Brexit.
“Let us be under no illusions: the UK will gradually begin to diverge from the EU framework. This is even one of Brexit’s main objectives,” he said.
He said: “The size of the UK financial market and the very close ties between the EU and the UK financial systems require us to pay more attention. We must grasp all the potential risks: financial stability, market integrity, investor protection. and consumers and a level playing field. “
EU and UK negotiators will continue discussions until the end of the week before another week of conferences will be held in London next week.
In London, it emerged that UK companies that export to the EU will have to wait for tax authorities’ authorization before moving their goods.
Trucks will only be able to move loads to the EU if they have a valid reference from the so-called freight vehicle traffic service, a new and untested IT platform, based on plans drawn up by the government.
“British exporters will be the biggest losers of this,” said Naomi Smith, CEO of Best for Britain, a pro-EU electoral group. “Additional bureaucracy threatens to clog our commercial arteries.”