The EU cannot allow London to maintain its position as the dominant financial centre in Europe after Brexit unless the UK remains bound to all of the EU’s rules, a top European official said on Tuesday.
Jeroen Dijsselbloem, the president of the Eurogroup of nations that use single currency, said the EU must “stand firm” in the face of expected resistance from the UK government.
“We cannot allow a third country to have access, full passporting rights to the financial services market in Europe, if at the same time we allow them to deviate on capital requirements, consumer protection standards, whatever,” Mr Dijsselbloem told members of the European Parliament on Tuesday.
“We can’t allow the the financial services centre for Europe and the eurozone to be outside Europe and the eurozone and to go its own way in terms of rules, regulations and requirements,” he said. “Simply… we cannot allow that to happen.”
“We have to take a firm stand on this, there is no alternative,” the Eurogroup president said. This “of course doesn’t appeal to the British,” he added.
If Britain does not continue to abide by European law, London will lose its dominance as the continent’s financial hub, he warned.
Mr Djisselbloem, who is also the Dutch finance minister, noted his country’s close historical ties with Britain and said the EU must attempt to mitigate the economic impact of Brexit for all parties, not just those remaining in the Union.
He also warned that the fallout from Brexit may harm the UK by slowing investment.
“Investors are simply hedging their risks, they need to take decisions, this year, next year, for the coming years,” he said.
“So they will rethink their investments, and I say this without any joy at all, this will start having an impact on the British economy, the City, in coming years.”
“It’s going to be a tough ride, specifically for the UK.”
Mr Djisselbloem's words come after an embarrassing document, reportedly a leaked UK government memo, appeared to admit that the country is unlikely to be able to maintain single market access.
The Prime Minister of Luxembourg Xavier Bettel responded to a so-called “secret memo”, telling AFP: “They [the British government] want to have their cake, eat it, and get a smile from the baker, but not the other things. There are European values which cannot be separated. No cherry picking.”
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