NEWS
22/05/2017 13:40 BST | Updated 22/05/2017 20:43 BST

Plan To Move Currency Clearing Out Of City 'Nasty Piece Of Economic Nationalism'

A former Conservative Party treasurer has accused some European countries of a "real nasty piece of economic nationalism and protectionism" over plans to move euro-clearing to the Continent.

Michael Spencer, the billionaire founder of brokerage firm Icap, hit out over the EU's bid to take the lucrative market back from the City of London after Brexit.

The European Commission will rule next month on how to police euro-denominated business outside the EU and is studying how to regulate overseas clearing houses - which act as middlemen in trades and ensure a deal is completed in the event of a default - that affect financial stability in the EU.

The industry is currently dominated by London.

Mr Spencer, a close personal friend of former prime minister David Cameron, said some euro deals were cleared in the US, while deals in 19 different currencies are also cleared in London.

"This proposal by certain people in Europe to repatriate euro-clearing to the eurozone is nothing more than a real nasty piece of economic nationalism and protectionism," Mr Spencer told BBC Radio 4's Today programme.

"Logic would dictate that it's in Europe's interest to have a sensible agreement with the UK on financial services and not to seek to stupidly plunder, as some Europeans feel they can do, to try to plunder the UK's financial services.

"Damaging London, in my opinion, will also damage Europe and I think it is in the interests certainly of the UK but certainly of the EU as well to make sure that London's capability as a global financial centre remains properly intact and undamaged."

Mr Spencer's comments come after the London Stock Exchange's chief executive Xavier Rolet warned investors would be 100 billion US dollars worse off if euro-denominated clearing is forced out of the capital by the EU.

Mr Rolet said in The Times the EU should not meddle with a safe, transparent system, adding this "would achieve the opposite of the G20 aims".

"It would increase, not reduce, levels of systemic risk and increase costs for European companies, diverting capital away from the European economy.

"If Europe insists on trying to implement an artificial, inefficient location policy, it will only hurt the European capital markets and the real economy. The rest of the global market will carry on," he said.