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London targeted by EU's 'absurd' plan to 'drive business out of UK into Europe'

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The agreement of the Brexit trade deal has not put an end to political disputes between Brussels and London

. Last month, the EU angered many in the UK by threatening to block the delivery of coronavirus vaccines into Northern Ireland. And disagreement remains over the Northern Ireland protocol, which the Government is hoping to change with no luck thus far. However, financial services looks set to become the next sticking point as experts warn of a new feud between the EU and the UK.

The EU no longer recognises the UK’s full “equivalence” – a mutual recognition of each side’s regulatory standards – meaning the City of London could lose business in Europe.

The row has culminated in Amsterdam surpassing the City of London as Europe’s largest share trading centre.

Miles Celic, chief executive of financial services group TheCityUK, and Nick Collier, the City of London Corporation’s representative in Brussels, told the House of Lords last month that the EU’s financial services policy was actually being driven by political objectives, not concern over regulation.

They warned that EU officials could use so called “equivalence” rulings to drive business out of Britain and into the EU, and that the tool could also be exploited to pressure Britain to follow EU rules on financial services.

Mr Colliers said it was “absurd” for the EU not to grant equivalence rulings, adding: “There isn’t really a technical case for not granting it, it’s really a political case.”

Mr Celic argued that the EU will often use financial services rules as leverage in a negotiations.

He said: “You speak to those who’ve been involved in equivalence decisions before and sometimes they were technically driven but often it would be, as we were told, a file would be put on a senior person’s desk in Brussels and they would be told — often by somebody not involved in financial services at all — that there was a negotiation going on, whether it was on free trade or something else, with some country and they either wanted to use equivalence as a sweetener or as a leverage mechanism on that particular negotiation.”

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Mr Dijsselhof told CNBC: “Switzerland is technically equivalent, the EU has just used this as a political means to hold the Swiss hostage to talk about the overall framework agreement.

“You do see that the stance of the EU against third party countries is hardening more and more, and we in Switzerland have seen that, and you see that also in the EU-UK discussion, so it is an example of how hard it can be.”



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