Brexit latest: French and German firms will suffer without Britain's expertise says banking boss

City adopts new lobbying strategy as it battles for special status in Brexit negotiations

Frankfurt skyline - the British Bankers' Association says Europe needs the UK's financial expertise (Reuters)

Britain’s banks are adding a new angle to their campaign for special status in the Brexit negotiations by telling European governments that their companies risk being hurt too.

Firms from France to Germany could lose access to the region’s biggest financial hub, making it harder for them to borrow money or buy derivatives to protect against currency swings and fluctuating interest rates, Anthony Browne, British Bankers’ Association chief executive, told a commons select committee on Wednesday.

“We shouldn’t look at all this about what’s in our own national interest; it’s got to be in their interest as well,” Browne said.

“It’s in the interest of a lot of customers across Europe to be able to continue to have access to the services that London offers. It’s not in the interest of either side to sever that.”

Andrew Gray, UK regional financial services leader at PricewaterhouseCoopers, said that some of the wider costs that would affect the UK and Europe “should be more fully understood” before negotiating positions get too hard. “The failure of an investment bank to provide a German corporate with the right financial structuring would inevitably be a direct cost on the German corporate, as well as a loss of revenue for the English subsidiary of the particular institution.”

A key reason for British bankers to be concerned: EU Commissioner for financial markets, Valdis Dombrovskis, told Handelsblatt today that failure to respect the rules of the single market will cost U.K. banks their access to EU customers.

Chancellor of the Exchequer Philip Hammond, who met bankers yesterday and pledged them support, and Trade Secretary Liam Fox both speak in Parliament today.

German Olive Branch?

The EU should ease its demand for the UK to allow free movement of workers in return for post-Brexit market access because that would help keep Britain tied to Europe, a senior member of Chancellor Angela Merkel’s party said.

Norbert Roettgen, head of the German parliament’s foreign affairs committee, took a more accommodating stance than Merkel, who signed up to the decision of EU governments that the so-called four freedoms — capital, goods, services and labor — aren’t negotiable.

While Roettgen doesn’t speak for the government, his comments reflect a view among many policy makers in Merkel’s Christian Democratic Union that it’s in Germany’s interest to maintain strong business ties with the UK

“We should think out of the box, not only black or white,” Roettgen told Bloomberg Television. “We should be flexible as Europeans” to keep relations with the UK “as close as possible,” he said.

Opportunity Cost

The Government has delayed a raft of decisions needed to spur investment in clean-energy technologies from offshore wind to nuclear power as it contends with the Brexit vote.

The newly-formed Department for Business, Energy and Industrial Strategy may postpone until next year publication of the fifth carbon budget, a key plan setting out how the UK will meet its carbon reduction targets for 2030, Climate Change Minister Nick Hurd said on Tuesday.

“I think there’s some flexibility around the publication,” Hurd said. “It’s more important to get this right than to rush something out that doesn’t hit the target.”

Housing Hope

The housing market gained momentum in August with the Royal Institution of Chartered Surveyors saying today that its house-price gauge rose to 12 from a three-year low of 5 in July as more real-estate agents reported appreciating prices. In London, it remained negative for the sixth successive month, indicating home values are falling.

“There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU referendum,” Simon Rubisohn, chief economist at RICS, said in the report.

On the Markets

The pound fell the most in more than two weeks yesterday after Bank of England Governor Mark Carney signaled further monetary easing is still possible even amid signs the economy has weathered the shock of the Brexit vote.

And Finally...

This weekend’s “Last Night of the Proms” could be dragged into the Brexit battle. The traditional evening of classical music and patriotism, when concert-goers flock to London’s Albert Hall to wave Union Jack flags and sing “Land of Hope and Glory,” may be hijacked by an anti-Brexit group, the Daily Telegraph reported. The newspaper says a crowd-funding campaign has been launched to buy 5,000 blue EU flags for volunteers to hand out to the audience to wave.

Bloomberg