The British Government has just two weeks left to make major Brexit concessions to the EU if it is to have any hope of stemming the flight of tens of thousands of jobs from London’s financial industry.
Banks and other firms in the City of London have warned that they will be forced to “press the button” on moving jobs from London unless there is a solid agreement by Christmas on a transition period to avoid the disruption of a “cliff-edge Brexit” when the UK leaves the EU in March, 2019.
The chances of meeting that Christmas deadline for a transition deal diminished sharply yesterday when the EU’s chief negotiator Michel Barnier (left) warned that it could take “weeks, or maybe even months” for the Brexit negotiations to even begin discussing such arrangements.
The next round of EU-British talks, beginning on October 9, looms as the last chance to revive the faint hope of making progress this year on a transition deal. This week’s fourth round of negotiations failed to provide the decisive breakthrough that Prime Minister Theresa May had hoped to achieve with her Florence speech last week when she proposed a two-year transition period during which the UK would in effect stay in the single market and pay about 20bn Euros to Brussels.
Brexit Secretary David Davis is hoping that the October 9-12 talks will make enough progress to convince an October 19 summit of European leaders to open negotiations on the subjects that Britain desperately wants to discuss; a post-Brexit transition deal and the UK’s future trading relationship with the EU.
Barnier said yesterday that there had still not been enough progress on the three crucial issues that Brussels insists must be dealt with first – the Northern Ireland border, the rights of EU citizens living in Britain and the “divorce payment” to be paid by Britain when it leaves the EU.
“We have had a constructive week, yes, but we are not yet there in terms of achieving sufficient progress,” he said. “Further work is needed in the coming weeks and coming months.”
The European Parliament, which will hold a veto over any eventual Brexit deal, also argued yesterday that there had not been enough progress for the October summit of European leaders to authorise the opening of trade talks.
“Crunch Time”
TheCityUK, the lobby group for London’s finance industry, warned that the industry was “getting to crunch time” and would be forced to accelerate plans for moving jobs from London unless there was a legally-binding, fixed-term Brexit transition deal agreed by the end of the year.
Gary Campkin, the group’s director of policy and strategy, said politicians needed to face up to the fact that businesses needed clarity given that a worst-case scenario could see UK-based finance houses lose important elements of their access to EU markets.
Financial services companies were already doing “what they have to do to protect their businesses (by) planning for the worst and hoping for the best”, he said. Many were bracing to move some of their operations to other EU states and without rapid clarity on a transition deal they would need to assume the worst, he said.
William Wright, the managing director of the capital markets think-tank New Financial, told Felix Magazine that that timeline was over-optimistic. “There is not going to a agreement on a transition period by the end of the year,” he said.
Although Prime Minister May said in Florence that Britain would “honour commitments we made during the period of our membership” and pay its debts when it left the EU, a frustrated Barnier and a defiant Davis agreed yesterday that the British negotiators had this week refused again to explain how large it believed those commitments were.
“The UK explained also that it was not in a position yet to identify its commitments taken during membership,” Barnier said. “For the EU, the only way to reach sufficient progress is that all commitments taken at 28 [member states] are honoured at 28.”
Davis indicated that Britain wanted to tie the issue of a divorce payment to the future EU-British relationship but Barnier insisted there was “no possible link… no logical or coherent link” between paying past debts and beginning a new partnership.
Keir Starmer, Labour’s Shadow Brexit Secretary, said that time wasted by “Cabinet infighting and the Prime Minister’s inflexibility (meant) it looks highly likely that the October deadline for concluding the first phase of talks will be missed.”
Bert Koedners, the Foreign Minister of the Netherlands, gave a sense of the growing impatience in European capitals when he said the British Government was “daydreaming.” “I don’t think I’m the only one worried about the lack of realism we see on the British side,” he said. “The clock is ticking. Big Ben may be still for renovation, but in Europe time ticks on.”
by Peter Wilson
The post Brexit: Two Weeks to Avert City Exodus appeared first on Felix Magazine.
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