Around 100,000 jobs may now be at risk after a top EU lawmaker warned that financial business denominated in euros must move from the UK to the EU after Brexit.
“People expect that we do the euro business and all the business which is linked to the euro on European soil,” said Manfred Weber, a political ally of German Chancellor Angela Merkel and European Commission president Jean-Claude Juncker
Mr Weber, who heads the European People’s Party, the largest group in the European Parliament, said that it was not conceivable that euro-denominated business could remain in London.
Mr Weber said the EU should support its own financial hubs such as Paris, Frankfurt, Dublin and Amsterdam.
Financial transactions can currently be cleared anywhere in the world and London is the leading centre, processing around £440bn of transactions every day. Xavier Rolet, the head of the London Stock Exchange said the lucrative business supports around 100,000 jobs in the UK.
But as Brexit looms, EU officials have repeatedly said London can no longer maintain the euro-denominated business.
Mr Rolet said in September that this could put the whole industry in doubt as companies seek to keep their clearing operations in different currencies together.
The EU executive has not yet stated a clear position on the issue ahead of the upcoming Brexit negotiations, but proposals have been mooted.
In September EU officials began discussing plans to limit the number of euro trades that could be processed in New York so that similar restrictions can be placed on London when it is outside the EU.
The European Central Bank believes the clearing business must be within the euro zone to facilitate the supervision of activities that could endanger financial stability if not properly monitored.
In 2015, the ECB attempted to relocate clearing of euros to within the currency zone, but the European Court of Justice ruled that the bank did not have the competence to regulate the industry.
The European Commission could now propose a forced relocation from London to the EU of the clearing business.
Additional reporting by Reuters
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