Monday

24th Jul 2017

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 and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  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.

EU urges UK to clarify its Brexit positions

EU and UK negotiators presented their Brexit positions to identify common grounds this week, but that was made difficult by the scarcity of UK position papers.

Britain and EU 'get to work' on Brexit

British and EU negotiators launched the first substantive round of negotiations on Brexit on Monday, with the UK still ambiguous about its position on the issue of financial settlement.

News in Brief

  1. Polish parliament adopts controversial justice reform
  2. GMO opt-out plan unlikely to go anywhere in 2017
  3. Slovak PM threatens to boycott inferior food
  4. France takes Google's 'right to be forgotten' to EU court
  5. Turkey accuses German companies of supporting terror
  6. Israel's Netanyahu caught calling EU 'crazy'
  7. UK does not collect enough data to expel EU nationals
  8. Polish president threatens to veto justice reform

Stakeholders' Highlights

  1. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  2. ACCAAnnounces Belt & Road Research at Shanghai Conference
  3. ECPAFood waste in the field can double without crop protection. #WithOrWithout #pesticides
  4. EU2017EEEstonia Allocates €1 Million to Alleviate Migratory Pressure From Libya in Italy
  5. Dialogue PlatformFethullah Gulen's Message on the Anniversary of the Coup Attempt in Turkey
  6. Martens CentreWeeding out Fake News: An Approach to Social Media Regulation
  7. European Jewish CongressEJC Concerned by Normalisation of Antisemitic Tropes in Hungary
  8. Counter BalanceOut for Summer Episode 1: How the EIB Sweeps a Development Fiasco Under the Rug
  9. CESICESI to Participate in Sectoral Social Dialogue Committee on Postal Services
  10. ILGA-EuropeMalta Keeps on Rocking: Marriage Equality on Its Way
  11. European Friends of ArmeniaEuFoA Director and MEPs Comment on the Recent Conflict Escalation in Nagorno-Karabakh
  12. EU2017EEEstonian Presidency Kicks off Youth Programme With Coding Summer School

Latest News

  1. Dutch coalition talks lengthiest in 40 years
  2. Polish parliament steps up showdown with EU
  3. EU urges UK to clarify its Brexit positions
  4. Law expert: direct EU powers have become too complicated
  5. Winter is here for Spitzenkandidat, but he'll survive
  6. Mafia money pollutes the EU economy
  7. Central Europe should be wary of Brexit stopping
  8. Poland's 'July coup' and what it means for the judiciary