NEWS

EU's Brexit Chief Wants 'Special Relationship' With Square Mile Post-Brexit

'There will be a special/specific relationship.'

14/01/2017 09:48

The EU’s chief negotiator on Brexit has offered the first hint of a compromise from Brussels to ensure member states continue to have easy access to the City, according to reports.

Michel Barnier has indicated he wants the remaining 27 countries to have a “special relationship” with the financial markets of the City of London according to unpublished minutes seen by the Guardian.

The paper said he told a private meeting of MEPs that work was needed to avoid financial instability once Britain left the bloc, according to a summary of the talks by the European Parliament.

Francois Lenoir / Reuters
The EU’s chief negotiator Michel Barnier wants a special deal with the City of London post-Brexit 

“Some very specific work has to be done in this area,” he said, according to the minutes.

“There will be a special/specific relationship. There will need to be work outside of the negotiation box ... in order to avoid financial instability.”

A spokesman for the European Commission told the Guardian that the minutes, drawn up by European parliament officials, did not “correctly reflect what Mr Barnier said”.

But the paper quoted a source who was at the meeting as saying the minutes represented a “more or less accurate” account of the discussions.

The disclosure will encourage pro-Brexit MPs who have long argued that the UK will have more leverage in the negotiations than some critics have allowed.

POOL New / Reuters
Barnier's comments echo the views of Bank of England governor Mark Carney

Barnier’s comments appear to reflect concerns that EU governments and countries will find it harder and more costly to raise capital if they no longer have free access to the City.

They echo the views of Bank of England governor Mark Carney, who told MPs on Tuesday that – at least in the short-term – the risks to financial stability from Brexit were now greater for the remaining members than they were for the UK.

“If you rely on a jurisdiction (the UK) for three-quarters of your hedging activities, three-quarters of your foreign exchange activity, half your lending and half your securities transactions, you should think very carefully about the transition from where you are today to where the new equilibrium will be,” he said.

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