Posts Tagged ‘City of London’

EU vows to get tough on UK’s market access after Brexit

August 22, 2018

Plan to step up oversight of ‘equivalence’ rules that finance sector will rely on

Image may contain: sky and outdoor

© Anna Gordon/FT

By Jim Brunsden in Brussels

The EU’s financial services chief has warned that Brussels will be strict in policing Britain’s rights of access to the bloc’s market after Brexit.
Valdis Dombrovskis said he welcomed UK proposals to build market access for the City of London around EU rules, known as “equivalence”. But he said market access could never be taken for granted, with Brussels determined to toughen its assessments of whether countries meet the conditions.

The equivalence rules make it easier for non-EU financial institutions to operate in the single market if the European Commission decides that their home country’s financial regulations are as tough as the EU’s own.

Mr Dombrovskis said Brussels was not offering any kind of “super equivalence” to the UK, and that assessments of whether Britain qualified would require individual assessments “sector by sector and legislation by legislation”.

He also said Brussels was pressing ahead with measures to reinforce oversight of equivalence access, with stronger requirements for countries’ financial supervisors to share information with the EU and more monitoring of whether jurisdictions continue to meet the criteria.

“We see that there is a need to strengthen systemic monitoring of continued compliance,” said Mr Dombrovskis. “So this is one area where we will come with a more systematic approach.”

Many EU officials privately assume that Britain — barring a sea-change in its regulatory and supervisory approach — would have little difficulty in securing equivalence rights after Brexit, given that it already applies EU rules.

But Mr Dombrovskis’ remarks are a sign of Brussels’ determination to prevent regulatory undercutting that could hand City firms an advantage over EU competitors.

The British government, in a white paper on Brexit published in July, said it should benefit from a full set of equivalence rights after the end of its post-Brexit transition period in 2020. Britain also called for equivalence to be expanded to “encompass a broader range of cross-border activities”.

Mr Dombrovskis said Brussels was open to discussion of adding more equivalence possibilities into EU law, noting that national governments were negotiating draft legislation that would clarify access rights for non-EU brokerages and other investment firms.

“We are, if you want, at a relatively early stage, because the UK white paper is actually the first time the UK clearly acknowledges that it is willing to build on this system of enhanced equivalence,” he said.

“We can now get into more detail and discuss what exactly that means, what areas are covered, are there some important areas missing and so on.”

The UK government, in slides published this week, said its proposals would allow each side to “retain autonomous judgment about access to their market” while also providing certainly and stability to businesses.

The plans include a “bilateral agreement” that would require each side to consult the other before withdrawing access and provide a safeguard to make sure that “existing contracts can be fulfilled even if access is withdrawn”.

Mr Dombrovskis said it was positive that Britain had embraced a “more realistic way forward” compared with earlier plans to bypass equivalence by securing broader, permanent access rights — an idea Brussels has comprehensively rejected.

Mr Dombrovskis also said that while equivalence was in the EU’s gift, Britain should not underestimate its stability. The EU has never reversed an access decision.

“Something major needs to happen for that to happen”, he said. “And so far there has not been any single precedent for that.”

Brussels has granted more than 200 decisions under the system, which was introduced in regulations adopted after the 2008 financial crisis. The decisions concern more than 30 countries including the US, Singapore and Hong Kong.

Britain seeks EU nations’ support to avoid ‘messy divorce’

August 1, 2018

 “There is a real risk of a messy divorce, which would be a geostrategic mistake”.

Britain has stepped up warnings of the risk that the Brexit talks collapse as it seeks to bypass Brussels and persuade individual European Union nations to back its plans for future economic ties.

Foreign Minister Jeremy Hunt visited Vienna on Wednesday, after talks in Paris the day before, and warned “there is a real risk of a messy divorce, which would be a geostrategic mistake”.

His trip was part of a wider European diplomatic offensive by Britain, which will see Prime Minister Theresa May meet French President Emmanuel Macron at his Mediterranean retreat on Friday.

Image may contain: 1 person, closeup

She will seek to sell her proposal for close economic ties with the EU after Brexit, a half-in, half-out plan that has enraged her own eurosceptics but which she insists is the only practical way forward.

The European Commission’s chief negotiator, Michel Barnier, has expressed scepticism and last week rejected a key element of the proposal relating to tariffs on the Irish border.

Image may contain: 1 person, suit

But London is seeking to emphasise directly to European capitals the need for greater flexibility, warning that all sides would suffer if Britain leaves the EU next March without an agreement in place.

“The probability of no deal is increasing by the day until we see a change of approach from the European Commission,” Hunt told London’s Evening Standard newspaper in an interview published Tuesday.

He added: “France and Germany have to send a strong signal to the Commission that we need to negotiate a pragmatic and sensible outcome that protects jobs on both sides of the Channel.”

“For every job lost in the UK, there will be jobs lost in Europe as well if Brexit goes wrong,” Hunt said.

– France and EU ‘cohesion’ –

Two of May’s pro-Brexit ministers, including Hunt’s predecessor Boris Johnson, resigned over her Brexit plan last month saying it would undermine the opportunities of leaving the EU.

But May is pressing ahead, discussing it with German Chancellor Angela Merkel last month, and holding talks last week with the Austrian and Czech leaders.

Image result for German Chancellor Angela Merkel, photos

German Chancellor Angela Merkel

On Friday, May will have a meeting and private dinner with Macron at the French presidential retreat at Bregancon, the first foreign leader to be invited there.

A government source told the Times that France was “holding fire” on May’s Brexit plan.

“So we’re making the case to them. It looks like the jury’s still out on them, so that’s why she’s going,” the source said.

It follows a visit to Paris by her Brexit minister Dominic Raab on Thursday, and another last week by her business secretary Greg Clark, who also visited Italy and Portugal.

France is seen as taking a particularly hard line in the Brexit negotiations, especially on financial services, where it has openly sought to poach businesses from the City of London.

Some British officials also believe France is opposing continued British involvement in the EU’s Galileo satellite programme because of the potential benefits to its own aerospace sector.

However, Austrian Foreign Minister Karin Kneissl warned after talks with Hunt on Wednesday against attempts to divide the bloc, saying there was a “high degree of cohesion” in the EU on how to proceed.

Image result for Austrian Foreign Minister Karin Kneissl, photos

Austrian Foreign Minister Karin Kneissl

Kneissl, whose country currently holds the rotating EU’s presidency, added that it was “very clear” that the European Commission was leading the talks.

Barnier himself said last week that there was not a “sliver of difference” between him and the 27 EU leaders in the negotiations.

– Brexit worries –

As the government goes on the charm offensive abroad, concerns are growing in Britain itself about the practical impact of leaving the EU without a deal.

Downing Street was forced to deny on Monday that it had plans for the military to step in, but ministers have confirmed plans to stockpile food and medicines.

The impact of Britain’s decision to leave the EU is already being felt — official figures released Tuesday reveal Britain was the only G7 nation to experience a slowdown in 2017.

Meanwhile Freedom of Information requests from around 30 local authorities, lodged by Sky News, revealed their concerns about Brexit, ranging from a fall in agricultural land prices to a lack of Europeans working in the care sector.


Michel Barnier: EU needs autonomy — Rejects Theresa May’s financial services vision for London and Europe

July 23, 2018

Michel Barnier dismisses white paper’s ‘enhanced equivalence’ proposal saying EU needs autonomy

Image result for london, financial center, photos

Michel Barnier said Theresa May’s vision for the City’s future ties with the EU would violate the principle that access rights to the bloc’s financial services market are a gift from Brussels that can be freely withdrawn.

By Jim Brunsden in Brussels

Brussels has rejected the UK’s proposals on how to govern the City of London’s access to the European market after Brexit, saying Theresa May’s latest financial services plan would rob the EU of its “decision-making autonomy”.

Michel Barnier, the EU’s chief Brexit negotiator, told European affairs ministers on Friday that the British prime minister’s vision for the City’s future relationship with the EU would violate the principle that access rights to the bloc’s financial services market are a gift from Brussels that can be freely withdrawn.

Image may contain: 1 person, eyeglasses

His remarks were a rebuff to the UK government — which published its white paper this month on Britain’s future relations with the EU — and highlight the many conflicts between the two sides despite a more conciliatory tone over the Northern Ireland border issue at the same meeting.

The 98-page document signalled a shift in its position on financial services with plans for an enhanced “equivalence” model — building on an existing EU system that countries including the US and Singapore use to simplify their access to the bloc.

The UK has acknowledged that it would lose its single market “passport”, and Philip Hammond, chancellor, scrapped a more ambitious “mutual recognition” plan, but said the City would seek a better deal than the EU’s existing equivalence model.

However, according to two people who attended Friday’s meeting, Mr Barnier told ministers that the plan would ride roughshod over the EU’s stance that equivalence decisions must be made unilaterally by Brussels. He said it would amount to a “system of generalised equivalence that would in reality be jointly run by the EU and UK”.

The UK white paper called for equivalence to be “expanded”, saying it was “not sufficient to deal with a third country whose financial markets are as deeply interconnected with the EU’s as those of the UK are”.

It also envisaged a unique system of joint governance and a “safeguard for acquired rights”, to prevent the UK’s access to the EU financial services market from being easily withdrawn.

Under EU rules, the European Commission grants equivalence rights after determining whether other countries’ regulatory regimes, in areas such as capital standards for banks and collateral rules for traders, are as rigorous as the EU’s own.

Mr Hammond had previously backed a broader approach of “mutual recognition”, where the EU and UK would grant each other substantial market access rights in exchange for commitments to seek the same regulatory outcomes over time.

Speaking to reporters after Friday’s meeting, Mr Barnier was careful not to reject the UK’s white paper outright, saying that Brussels would “constructively” engage with the proposals. But he said that the document had raised “many questions” the UK had not yet answered.

He questioned the UK’s plans to remain in the EU’s single market for goods while leaving it for services.

“In products that you use every day, like your telephone, between 20 to 40 per cent of the value of the product is linked to services,” Mr Barnier said. “How do we avoid unfair competition on services?”

Another concern for Brussels centres on the UK’s proposals to have access to the single market for goods without having to apply all of the bloc’s product standards.

“The UK says [it is] ready to align on goods, but only for standards controlled at the border,” he said, adding: “The UK will not align to agri-food rules, for example, on pesticides or GMOs because compliance is not policed at the frontier. So how can we protect the European consumer?”

Additional reporting by George Parker


UK set to publish Brexit plan that sparked rebellion

July 12, 2018

British Prime Minister Theresa May will publish details Thursday of her long-awaited Brexit blueprint to restart talks with the EU, after facing down a revolt by eurosceptic ministers that could still unseat her.

In a policy paper, the government will outline proposals for a free trade area and a “common rule book” with the EU in goods after pressure from businesses to allow cross-border trade to continue as normal.

But Britain would still plan to leave the EU single market and customs union and set its own path on the far bigger services sector, hoping to be able to curb EU immigration and strike its own trade deals with third countries.

For the City of London the plan would propose “a looser partnership” with the EU rather than original proposals for “mutual recognition” of British and EU rules after Britain leaves the bloc in March, the Financial Times reported.

© PRU/AFP/File | British Prime Minister Theresa May’s Brexit blueprint has caused outrage among eurosceptic members of her Conservative party

“We’re making sure we’ve got a bespoke relationship with the EU,” Brexit Secretary Dominic Raab, who was only appointed on Monday after his predecessor David Davis quit in protest over the plan, told BBC radio.

“It’s a credible proposal. It’s bold, it’s ambitious but it’s also pragmatic,” he said.

The plan has caused outrage among eurosceptic members of May’s Conservative party, and foreign minister Boris Johnson joined Davis in dramatically quitting this week in protest.

Their departures, followed by a clutch of junior aides, destabilised May’s government and revived talk of a leadership challenge against her.

The prime minister is also likely to face some opposition in Brussels, where officials have repeatedly warned Britain to lower its expectations about how close ties can be.

“Of course the EU-27 is open to compromise but not one that can undermine the main pillars of the single market,” an EU official said on condition of anonymity.

An EU source said: “We will look at these things constructively, and in a way that is helpful to the prime minister.”

May has briefed leaders including EU President Donald Tusk and German Chancellor Angela Merkel on her plan and reported a positive response, although they are awaiting the detail.

Britain does not have long to argue its case — both sides are aiming for a deal by October, to allow time for its ratification by the British and European parliaments.

Failure to agree would see Britain leave the EU without a deal, with the risk of huge economic disruption on both sides of the Channel.

The Financial Times has reported that one contingency plan being examined in case of a no-deal Brexit is using barges to help keep the lights on in Northern Ireland in case there is disruption to electricity imports from the Republic of Ireland.

– ‘Status of colony’ –

Britain voted for Brexit in June 2016, but May has so far been unable to present a common position to Brussels on what she wants because of deep divisions in her government.

Amid warnings from businesses that continued uncertainty is risking investment and jobs, and fears time is running out, her cabinet finally agreed on a plan last week.

The aim is to keep EU rules on goods to protect complex manufacturing supply chains, using technology to levy its own duties on UK-bound products from outside the bloc, while diverging on services.

“We need to rise to the challenge and grasp the opportunities” of Brexit, said Raab, adding that the policy represented a “balance”.

But Johnson, a leading Brexit campaigner, said following EU rules without being able to alter them risked consigning Britain to the “status of colony”, and said it looked like a “semi-Brexit”.

Other eurosceptics who want a clean break with the bloc are also livid, prompting speculation they may launch a confidence vote against May.

Brexit-backing MPs, including leading eurosceptic Conservative Jacob Rees-Mogg, will also seek to force her hand by submitting amendments to a trade bill being debated in the House of Commons next week.

Rees-Mogg told AFP his aim was only “to help the government stick to some of its earlier promises”.



  (From FT)

Theresa May ditches hopes of keeping London in tight tie-up with EU

July 12, 2018

White paper discards ‘mutual recognition’ in favour of looser ties after Brexit

Image may contain: sky


By George Parker and Patrick Jenkins in London 

Theresa May has abandoned plans for a tight new relationship with the EU in financial services after Brexit, laying out a new proposal for a looser partnership in her long-awaited white paper on Thursday.

The new approach to the City of London’s relationship with Brussels, which will mean less access to the European market for UK-based financial service groups, has been described by a person who has seen the paper as “cohabiting but without the same commitment as marriage”.

The City proposal replaces the prime minister’s former “mutual recognition” plan, viewed in Brussels as the UK’s “cake-and-eat-it” approach to Brexit, and forms part of a detailed document including controversial plans for customs and a free trade area in goods.

Chancellor Philip Hammond agreed to discard the original mutual recognition plan — where the UK and EU would have recognised each other’s rules covering banks, fund management groups and insurance companies — after Brussels warned it would not create a unique model just for the UK.

Michel Barnier, the EU’s chief Brexit negotiator, said on Tuesday that the EU would never accept Britain’s mutual recognition plan, which failed to apply safeguards such as European Court jurisdiction.

Instead the white paper proposes a more relaxed tie-up, by improving the EU’s existing “equivalence” regime — where “third countries” such as the US have equivalent rules to the EU in certain financial areas — in an attempt to make Britain the third country with the closest relationship to the remaining EU27.

“Mutual recognition was like a marriage,” said one person who has seen the four-page section on financial services. “The new model is like cohabitation, with close collaboration, a shared approach to finances and decisions and obligations to each other, but ultimately separate people making their own choices.”

The British government has accepted that the new framework for co-operation on services, including financial services, means that “the UK and the EU will not have current levels of access to each other’s markets”.

Unlike the proposed free trade area in goods, where Britain would apply the EU rule book, the UK would be able to diverge more on the regulation of services, with an understanding that there would be a loss of market access if it did.

The term mutual recognition raised hackles in Brussels: it had previously been used to refer to divergent rules within the EU. Attempting to revive it in a post-Brexit context implied the UK wanted to leave the bloc while still considering itself an aloof member.

For regulators at the Bank of England, the key priority is to ensure the UK retains the right to ensure the country’s financial sector is secure. “That is not something we can outsource,” said one person familiar with the government’s position.

Mr Hammond has said the existing EU equivalence regime — where equivalence can be cancelled at 30-days notice — was not good enough.

What UK resignations mean for May and Brexit

The Treasury said: “The chancellor has been clear that existing equivalence won’t work. As the cabinet agreed at Chequers, the government is committed to agreeing a close future relationship on financial services and a bilateral solution that preserves the mutual benefits of integrated markets whilst protecting financial stability.”

Britain will push for equivalence arrangements, underpinned by a variety of EU directives, to be “enhanced” to ensure they are applied to key areas of finance such as securities trading and corporate lending.

“Ultimately you will end up with something midway between what used to be called mutual recognition and enhanced equivalence,” said one policymaker.

Mr Barnier said: “The EU has a long history of relying on the regulation and supervision of third countries. This is . . . what we call in the EU equivalence.

“The EU has adopted more than 200 equivalence decisions covering more than 30 foreign jurisdictions, including the US,” he added. “Why would this equivalence system, which works well, including for US industry, not work for the UK?”

Additional reporting by Caroline Binham in London, Alex Barker in Brussels and Andrew Edgecliffe-Johnson in New York

UK: Jeremy Corbyn threatens to make bankers ‘servants of industry’ in fresh attack on the City

February 20, 2018

The Telegraph


Jeremy Corbyn has launched a fresh attack on the City of London by promising to make financiers “the servants of industry” if he becomes prime minister.

The Labour leader warned in London on Tuesday that the finance sector’s “destructive” dominance over industry and “undemocratic” control over politics needed to be tackled so that the economy can be rebalanced.

“We will take decisive action to make finance the servant of industry not the masters of us all,” he told the EEF manufacturing conference.

“For a generation, instead of finance serving industry, politicians have served finance. We’ve seen where that ends.”

In a speech that will send shivers through the banking industry, Mr Corbyn vowed that the next Labour Government would be “the first in 40 years to stand up for the real economy” and combat the “financial wizardry” running through the City.

Something has gone ‘grossly and badly wrong’

While he admitted that finance was “the grease that oils the wheels of the economy” he said banks were currently suffocating the economy rather than helping it.

When bankers like Morgan Stanley say we’re a threat, they’re right.

The next Labour Government is a threat to a damaging and failed system that’s rigged for the few.

“When private debt is twice the size of the real economy, when traders no longer understand the products they’re trading, and banks are funding their own speculation rather than productive investment, something has gone grossly and badly wrong,” he said.

Claiming that investment banks had become “ever more removed from the economy where people make and deliver things” he called for major change across the City.

“We need a fundamental rethink of whom finance should serve and how it should be regulated,” he said. “There can be no rebalancing of our distorted, sluggish and unequal economy without taking on the unfettered power of finance.”

Tory MPs call comments ‘ill-informed’ and ‘barmy’

Jacob Rees-Mogg, a frontrunner for the job of next Tory leader, hit back at the “ill-informed” comments that  he said would hit industry.

“The City and industry work together – its international success lowers the cost of capital and brings investment to the UK,” he told The Telegraph. “To view them as masters and servants is ill-informed. Attacking the City ultimately hits industry too.”

Nicky Morgan, chair of the Treasury select committee, told The Telegraph that Mr Corbyn’s comments were “barmy” and displayed a lack of understanding.

“If Labour policy is promising more instability, that doesn’t help people,” she said. “It is this government that [has helped the sector] move away from the light touch regulation put in place by the last Labour government.”

Relevant Labour policies include plans for a National Investment Bank, which would involve a network of regional banks targeting lending to smaller businesses, as well as a so-called Robin Hood tax on financial transactions. Mr Corybn said last year that bankers are right to regard him as a threat as he plans to transform the industry.

Finance sector ‘lifeblood’ of UK economy

The business community spoke out in defence of British bankers on Tuesday. The Institute of Directors said that while it was true that the hangover of the financial crisis still loomed large, the City contributed huge amounts to the UK’s growth through jobs and taxes.

“This reality is often lost in the rush to cast bankers as the bogeymen of British business,” said its head of external affairs Jamie Kerr. “Blaming the financial sector for all our woes is neither constructive nor legitimate.”

Meanwhile the Confederation of British Industry (CBI) added that the sector was the “lifeblood of Britain’s economy, enabling all other sectors to deliver jobs, develop, innovate and grow.”

“It’s vitally important to maintain the strength of our world-beating financial services sector through a strong and agile regulatory landscape that protects consumers and fuels economic growth,” said Flora Hamilton, CBI’s head of financial services.

Stephen Jones, the chief executive of industry trade association UK Finance, said the sector has “undertaken significant reform in the last 10 years to ensure that the taxpayer should never need to bail out a bank again.

“Going forward, we stand ready to work with any government to ensure the sector continues its valuable contribution to the UK’s bottom line.”

UK to push EU for City of London’s favored Brexit plan

February 16, 2018


A European Union flag in front of the Elizabeth Tower

LONDON (Reuters) – Britain’s government is ready to push for the kind of Brexit plan for financial services that the City of London has long favored, but which has already run into opposition in Brussels, two government officials said on Friday.

London is expected to signal in the next few weeks that it wants a mutual recognition system to regulate financial services after Brexit, in the hope of preventing a hit to the City of London’s access to the bloc, they said.

“It is obviously in everyone’s interest to not just totally turn on its head the pan-European banking system,” one of the officials said. “Everyone has a lot to lose from this if we can’t get a deal.”

Bank of England Governor Mark Carney has previously said Britain and the EU should adopt a system of mutual recognition or run the risk of a hit to financial services across Europe.

Image may contain: 1 person

Bank of England Governor Mark Carney

With little more than a year to go before Brexit, many banks have begun activating contingency plans to move some operations out of the country.

Frustrated that there was little sign of how Britain’s government intended to protect the industry, London bankers came up with their own plan to the keep the single market open by Britain pledging to honor global standards.

But Brussels has rejected that industry proposal, meaning London’s bankers may have to rely instead on what is known as the equivalence system for regulation.

That legal mechanism allows countries from outside the EU to access the single market in limited circumstances. Access is patchy and can be revoked at short notice.

The government officials said that the mutual recognition plan was still favored by London because it would retain access for firms based in Britain to the EU’s single market while allowing some flexibility from EU rules.

The announcement could also ease the concerns in the finance industry that the government does not have a plan for the sector, the officials said.

One of the government officials said there were reasons to believe that Britain’s favored outcome was possible.

“The EU has never struck a deal with someone before where it has already had the exact same regulatory equivalence,” the official said.

“Secondly the commercial imperatives are 180 degrees different from a normal trade agreement. Normally we start from a status quo and say ‘wouldn’t it be great if we could get closer’.”

The Financial Times newspaper reported the government’s plan to endorse the mutual recognition plan earlier on Friday.

A spokeswoman for the finance ministry declined to comment on the reports which she said were speculation.

A final decision on the best model to pursue has not yet been taken, the government officials said.

Britain’s vast financial services sector looks set to be one of the most divisive areas in the Brexit negotiations. Britain wants a generous deal while the EU insists that Britain’s red lines — such as ending the free movement of workers from the EU — make that impossible.

Britain is home to the world’s largest number of banks and hosts the largest commercial insurance market. About six trillion euros ($7.5 trillion), or 37 percent, of Europe’s financial assets are managed in the UK capital, almost twice the amount of its nearest rival, Paris.

Additional reporting by Carolyn Cohn; Writing by William Schomberg; Editing by Toby Chopra


Business leaders propose ‘hybrid’ Brexit deal based on Turkey-EU relationship


Amajor business group has put forward a bespoke Brexit solution which it believes will protect manufacturers from customs chaos but also allow the UK to strike independent trade deals.

The Institute of Directors, a trade body with a membership of 30,000 business leaders, has proposed a customs arrangement that would allow for easy trade in industrial products and some processed foods. The proposal is largely modelled on the EU’s customs relationship with Turkey, with some key differences.

The UK would still be able to negotiate its own free trade agreements beyond the EU bloc, under the IoD model. This is a major red line for Brexit supporters who believe it is essential that any final deal…

Read more (Paywall):

David Davis demands UK say on EU rules during Brexit transition

January 28, 2018
Secretary of State for Exiting the EU David Davis takes a trip along the River Tees after he delivered a speech during a visit to PD Ports at Teesport on January 26, 2018 in Teesside, England | Ian Forsyth/Getty Images

The Brexit secretary set out the UK’s negotiating position on a transition deal in a major speech Friday.

MIDDLESBROUGH, England — The U.K. has conceded a lot to get the transition deal it sorely needs, but it has not given up asking for something in return — a voice at the EU table.

In a key speech on the British government’s vision for a transition period, Brexit Secretary David Davis said his negotiators would be seeking “a way of resolving concerns” if the EU were to change its rules to the detriment of the U.K. during the transition. During that period the U.K. — having ceded its seat at the European Council, its MEPs and its role in the Commission — will have no formal way to influence the EU legislation it will remain subject to.

While admitting that time is of the essence in agreeing a transition — both sides ideally want it sorted by the European Council summit in late March — Davis knows that he has little leverage over the EU27. The U.K. needs a transition deal more than they do — a fact underlined by an open letter signed by Davis and two other Cabinet ministers that is designed to reassure businesses who are increasingly worried about a lack of regulatory and legal certainty post Brexit.

“This will be a relationship where respect flows both ways”

— Brexit Secretary David Davis

And in any case, delivering what Davis wants will require some imaginative thinking. No such mechanism currently exists. Nor is it signaled in any of the leaked draft versions of the EU’s negotiating directives for the transition talks — a fact that has not gone unnoticed by the U.K., and was a significant factor behind their decision to set out the request ahead of those directives being finalized by the EU27 on Monday, individuals familiar with the matter said.

“This will be a relationship where respect flows both ways,” Davis said, speaking to an audience of business leaders summoned to a port warehouse in the northast town of Middlesbrough on Friday. “And it’s in that spirit we should approach the implementation period as the bridge to this new relationship,” he added.

Insurance policy

The dispute resolution mechanism imagined by Davis is one aspect of what looks like a three-tiered insurance policy by which the U.K. wants to protect itself against any EU rule changes that might harm its interests during the transition. What these might be is not explicit. Any alteration to financial services regulation that harms the City of London features heavily in British nightmares, however.

The first tier of the policy is trust. Davis called for an agreement that included “each side committing to not taking any action that undermines the other.” How enforceable such a commitment would be is debatable.

The second is practical reality. “It usually takes around two full years for major legislation to make its way through the EU system into law,” Davis said. So anything coming into effect during the transition, the U.K. would have a say in anyway.

It’s the third and final tier of the insurance policy that could be complicated. Notwithstanding the two previous guarantees, Davis said, “we will have to agree a way of resolving concerns if laws are deemed to run contrary to our interests and we have not had our say, and we will agree an appropriate process for this temporary period.”

To Brussels ears, highly attuned to the gentle rustle of cherries being picked, that might sound suspicious. For the EU27, not being in the EU means losing your say. Just ask Norway.

Much will depend on the detail of what the U.K. asks for — something Davis left unspecified. If it looks too much like membership, they can probably go whistle. But having agreed to accept all EU rules, and by continuing to pay their financial obligations to the EU, the U.K.’s negotiators may have bought a degree of goodwill to achieve something more limited. Time will tell.

Playing to the gallery

In truth, Davis’ pitch was as much aimed at a domestic audience as it was at Brussels.

It was only on Wednesday that he endured a needling inquisition about the transition period from Tory MP Jacob Rees-Mogg at the House of Commons’ exiting the EU committee.

Rees-Mogg, who has quickly emerged as the government’s most dangerous backbench scrutinizer, challenged Davis to explain how — by abiding by the rules, remaining under European Court of Justice jurisdiction and paying into the EU budget, all without any say in governance — the U.K. would be anything other than a “vassal state” for two years or more. Davis said at the same committee hearing that the transition would last “between 21 and 27 months.”

“Vassal state” — or “mini me” to the EU, as Rees-Mogg described it in a Thursday speech — is dangerous language for Davis and Prime Minister Theresa May, whose political authority over restless Brexiteers in their party rests on the idea that Brexit must mean British regulatory, legal and political autonomy.

Conservative MP Jacob Rees-Mogg | Oli Scarff/AFP via Getty Images

It was no surprise then that Davis made clear he also wanted to secure as much independence during the transition as he can. The Brexit secretary called for the U.K. to be able to negotiate and even sign its own free-trade deals with non-EU countries during the transition (although not to implement them).

Davis also reiterated the government’s plan to introduce a registration system for EU citizens coming to live in the U.K. during transition — allowing the government to point to a change in the immigration system that otherwise will mean freedom of movement continuing in all but name for that period. “It will have no bearing on people’s ability to work or visit,” Davis made clear. That too will struggle to win favor among backbench Brexiteers.

Many in government hoped a transition deal would be easy for the U.K. to push through, both domestically and in Brussels. The more we learn about it, the less likely that appears.

British Labour leader Corbyn tells Morgan Stanley: ‘We’re a threat’ — “Bankers like Morgan Stanley should not run our country but they think they do.”

December 1, 2017

LONDON (Reuters) – Britain’s opposition Labour leader Jeremy Corbyn warned Morgan Stanley that bankers are right to regard him as a threat because he wants to transform what he cast as a rigged economy that profits speculators at the expense of ordinary people.

 Image may contain: 1 person, suit

FILE PHOTO: Jeremy Corbyn, the leader of Britain’s opposition Labour Party speaks at the Conferederation of British Industry’s annual conference in London, Britain, November 6, 2017. REUTERS/Mary Turner/File Photo

Morgan Stanley cautioned investors on Nov. 26 that political uncertainty in Britain was a bigger threat than Brexit given the risk of Corbyn winning power and then dismantling what was once seen as one of the world’s most stable free-market economies.

“Bankers like Morgan Stanley should not run our country but they think they do,” Corbyn, a 68-year-old socialist, said in a video posted on Twitter that showed the towers of the City of London and Canary Wharf financial districts.

“So when they say we’re a threat, they’re right: We’re a threat to a damaging and failed system that is rigged for the few,” he said.

Morgan Stanley declined to comment.

London, which vies with New York for the title of the world’s financial capital, dominates the $5.1-trillion-a-day global foreign exchange market and is home to more banks than any other financial center.

But many bankers, CEOs and investors were spooked by the shock 2016 vote for Brexit and have been dismayed by the political turmoil which followed, including Prime Minister Theresa May’s botched gamble on a snap election in June.

May lost her party its majority in parliament in that election while Corbyn’s unexpectedly strong result in the vote has convinced many of Labour’s opponents that Corbyn is a potential prime minister if May’s government falls.


Kept in power with the support of a small Northern Irish political party, May has just over a year to negotiate Britain’s divorce from the EU that will shape Britain’s prosperity and global influence for generations to come.

Now many investors fear Corbyn, who was once dismissed by his own party as an out-of-touch peace campaigner with no hope of ever winning power, could win the top job if the political turmoil continues in London.

One senior executive at a top U.S. investment bank said that at a meeting in New York recently concerns over Corbyn trumped concerns about Brexit.

“Their top concern was not what’s happening in Germany and Spain, or North Korea and Trump: their main concern was what’s happening in the UK and what Corbyn might mean for the country,” the executive, who spoke on condition of anonymity said.

“It’s like Cuba without the sun,” the executive said.

Morgan Stanley said Britain now faced a “double whammy” of uncertainty from Brexit and the domestic political instability.

“From a UK investor perspective, we believe that the domestic political situation is at least as significant as Brexit,” Morgan Stanley analysts said in a note to clients.

Morgan Stanley said there was a high likelihood of another national election in late 2018 — just months before Britain is due to leave the EU on March 29 2019.

The bank’s analysts said a Labour victory could mark the biggest shift in British politics since the late 1970s when Margaret Thatcher won victory, started to privatize chunks of the economy and opened up London to U.S. and Japanese banks.

“It is certainly plausible that the Labour Party could ultimately moderate some of its more radical policy ideas; the alternative could be the most significant political shift in the UK since the end of the 1970s,” Morgan Stanley said.


Corbyn has cast bankers as the villains behind the 2008 financial crisis and has promised to increase taxes on the banks and investment funds which trade out of London, including their staff through higher income taxes.

Corbyn, who has promised sweeping renationalisation, higher public spending and tax rises for the rich, said banks like Morgan Stanley were speculators who had left ordinary people to pay the price for their greed.

“These are the same speculators and gamblers who crashed our economy in 2008 and then we had to bail them out,” Corbyn said. “Their greed plunged the world into crisis and we’re still paying the price.”

Corbyn said Morgan Stanley CEO James Gorman earned tens of millions personally and banks paid out billions of pounds worth of bonuses while Labour was the party of the people and a government in waiting.

Such “banker bashing” could be popular with some voters in Britain where financiers are often portrayed as vastly overpaid. Financial services contributed 11.5 percent of total UK government tax receipts in 2016.

Corbyn’s Labour won 40 percent of the votes cast in June 2017 while May’s Conservatives won 42 percent.

Morgan Stanley, which opened on Wall Street in 1935, set up its European headquarters in London in 1977 and it now has over 5,000 staff, most at a block in Canary Wharf. Morgan Stanley did not receive a British government bailout during the 2008 crisis.

Additional reporting by Anjuli Davies in London and Stephen Jewkes in Milan; Editing by William Maclean and Angus MacSwan

Brexit: City of London office leasing at a ten-year low — Britain is living in ‘fantasy land’ over hopes for a ‘basic’ Brexit, senior EU officials and diplomats say

November 4, 2017

Property firm says uptake has slowed down after the Brexit vote

By Neil Callanan

The Independent

Firms are continuing to delay decisions about leasing space in London’s main financial district after the UK’s vote to leave the European Union, according to Brookfield Property’s chief executive Brian Kingston.

“Leasing activity is slow,” Mr Kingston said on a call with analysts on Thursday.

“The leases that are getting done, rents are still holding in pretty well. But the level of activity I think is probably the lowest it’s been in over a decade in the City of London.”

Brookfield has been one of the biggest developers of office buildings in the so-called Square Mile since it began buying up land plots in 2010.

It sold its stake in the 20 Fenchurch Street tower known as the Walkie Talkie in the third quarter at a capitalisation rate of 3.5 per cent, one of the highest prices on record for the financial district.

Mr Kingston also said it will be difficult for some firms to move people overseas.

“The idea of moving jobs or moving people from London to some of these other centres is not as simple as just picking up and moving it,” he said.

“London benefits from a tremendous amount of infrastructure including housing and schools and just generally quality of life that many of these other cities just don’t have” and “wouldn’t be able to turn on overnight.”


Image result for Disney, magic kingdom, photos

Britain is living in ‘fantasy land’ over hopes for a ‘basic’ Brexit, senior EU officials and diplomats say

The Telegraph


The British government is living in “fantasy land” if it believes that it can an amicable break-up with the EU in the event of a ‘basic’ Brexit, senior EU officials and diplomats have told The Telegraph.

Three separate EU sources in both Brussels and a leading EU capital have warned that British expectations of a “no deal, deal” had failed to understand the ramifications of the UK pulling out Europe without paying its bills.

The tough European line raises serious question about the value of assurances given by David Davis to the Lords this week that Europe would do a “basic” deal with Britain in the event that both sides were unable to negotiate a trade deal.

The Brexit secretary told the Lords EU select committee that in the “very, very improbable” event that a deal proved beyond the two sides, worst-case scenarios would be averted.

“Whatever happens we will have a basic deal without the…

Read the rest: