19th Mar 2018

Breaking up City of London would be 'huge mistake'

  • The City "would not and could not be replicated anywhere else", said finance minister Hammond (Photo: EUobserver)

It is in interest of both the United Kingdom and the European Union to keep London's financial services industry broadly the way it is after Brexit, the UK's finance minister said Thursday (8 September).

“I believe that the structures that we have in London - with its very complex ecosystem of banks, funds, insurance companies, law firms, business services firms - would not and could not be replicated anywhere else,” chancellor of the exchequer Philip Hammond told members of the House of Lords' economic affairs committee.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

  • Hammond (r): from foreign affairs minister to chancellor of the exchequer (Photo: council of European Union)

He gave other governments in a veiled warning not to try and profit from Brexit by luring financial services from the City.

“To break it up, or to try to damage it in the pursuit of some very narrow and hypothetical national advantage would be a huge mistake for any of our European Union partners to follow,” he added.

It was Hammond's first appearance before a UK parliamentary committee since he was appointed in July by the country's new prime minister, Theresa May. Hammond previously served as foreign affairs minister.

He noted that despite what has “probably become quite fashionable among public opinion to think”, financial services “exist to support the real economy”.

“London's financial services market supports the real economy across Europe, not just in the UK,” said Hammond.

The minister added that the discussion on Britain's future relations with the EU should move beyond thinking along the lines of existing models.

“The UK is not Norway. It’s not Switzerland. It’s not even Canada. We are the world's fifth largest economy,” he said.

However, he also touched upon what will become one of the most difficult topics for negotiation, the relation between the so-called four freedoms in the European Union: freedom of movement of goods, services, capital, and people.

“It's clearly in our interest and I would suggest in the European Union's interest as well to have as free and open access to each other's markets, not just in financial services but in other trade areas as well,” said Hammond.

“But we cannot accept uncontrolled free movement of people. That's the political outcome of the referendum decision that was made.”

British citizens voted to leave the European Union in a referendum last June.

Formal negotiations have not yet begun, however. The remaining EU member states and the European Commission have taken the position that the UK first needs to trigger Article 50 of the EU treaty, which kickstarts the two-year negotiating period to settle the divorce.

The phrase “No negotiation without notification [of article 50]” has become some kind of mantra in Brussels, but a group of British expats on Thursday announced they would challenge that principle.

The group, which calls itself Fair Deal for Expats, said it will launch a complaint at the General Court of the European Union over a ban by EU commission president Jean-Claude Juncker from holding informal talks on Brexit.

Days after the referendum, Juncker said that he had issued a “presidential order”.

“I have forbidden commissioners from holding discussions with representatives from the British government,” he said. “I have told all the directors-general that there cannot be any prior discussions with British representatives.”

A spokesman for the campaign criticised Juncker's “dictatorial-style bullying tactics”.

“Mr Juncker is urging Britain to trigger Article 50 sooner rather than later, but he’s not entitled to issue edicts preventing the UK from having discussions with the commission. He’s forgetting that the UK is still a member state,” the spokesman, John Shaw, said according to a press release.

US and Japan warn UK on EU trade

Washington and Tokyo say trade relations with the EU are more important to them than those with Britain in the context of Brexit.

Column / Brexit Briefing

The City is right to be worried

By promising to prioritise migration control in Brexit talks, prime minister Theresa May has given a clear signal that she will prioritise provincial England over bankers.

'Decisive step' in Brexit ahead of EU summit

The UK and the EU have reached a legal agreement on citizens' rights and the financial settlement, but with still little progress on the future of the Irish border.

No-deal Brexit could cost €65bn a year

A no-deal Brexit would cost UK and EU firms £58 billion (€65bn) a year, but the cost could be just £31 billion if the UK stayed in a customs union.


No precedents for post-Brexit Irish border

Glib comparisons with the US-Canada border, or municipal boundaries within London, do not stand up to scrutiny - or the reality of an internal Irish border with 275 crossing points in a land beset by 30 years of armed conflict.

Stakeholders' Highlights

  1. Counter BalanceConmtroversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  2. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  3. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations
  4. Martens CentreEuropean Defence Union: Time to Aim High?
  5. UNESDAWatch UNESDA’s President Toast Its 60th Anniversary Year
  6. AJC Transatlantic InstituteAJC Condemns MEP Ana Gomes’s Anti-Semitic Remark, Calls for Disciplinary Action
  7. EPSUEU Commissioners Deny 9.8 Million Workers Legal Minimum Standards on Information Rights
  8. ACCAAppropriate Risk Management is Crucial for Effective Strategic Leadership
  9. EPSUWill the Circular Economy be an Economy With no Workers?
  10. European Jewish CongressThe 2018 European Medal of Tolerance Goes to Prince Albert II of Monaco
  11. FiscalNoteGlobal Policy Trends: What to Watch in 2018
  12. Human Rights and Democracy NetworkPromoting Human Rights and Democracy in the Next Eu Multiannual Financial Framework

Stakeholders' Highlights

  1. Mission of China to the EUDigital Cooperation a Priority for China-EU Relations
  2. ECTACompetition must prevail in the quest for telecoms investment
  3. European Friends of ArmeniaTaking Stock of 30 Years of EU Policy on the Nagorno-Karabakh Conflict: How Can the EU Contribute to Peace?
  4. ILGA EuropeCongratulations Finland!
  5. EUobserverNow Hiring! Sales Associate With 2+ Years Experience
  6. EUobserverNow Hiring! Finance Officer With Accounting Degree or Experience
  7. UNICEFCyclone Season Looms Over 720,000 Rohingya Children in Myanmar & Bangladesh
  8. European Gaming & Betting AssociationEU Court: EU Commission Correct to Issue Guidelines for Online Gambling Services
  9. Mission of China to the EUChina Hopes for More Exchanges With Nordic, Baltic Countries
  10. Macedonian Human Rights MovementCondemns Facebook for Actively Promoting Anti-Macedonian Racism
  11. Nordic Council of MinistersGlobal Seed Vault: Gene Banks Gather to Celebrate 1 Million Seed Collections
  12. CECEIndustry Stakeholders Are Ready to Take the Lead in Digital Construction