German head of the conservative European People’s Party (EPP) group, Manfred Weber, today said that London should cede euro denominated financial business to EU cities like Amsterdam, Paris or Frankfurt once the UK eventually leaves the European Union.
Around £440 billion of euro-denominated trade pass through Britain’s clearing houses everyday thanks to so-called ‘passporting’ rules which currently allow them to sell their services freely across the rest of the EU and also give firms based in Europe access to Britain.
Weber’s comments have dampened hopes that London will end up hosting the euro-related operations after Britain voted to leave the EU nearly a year ago.
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“EU citizens decide on their own money. When the UK is leaving the European Union it is not thinkable that at the end the whole euro business is managed in London. This is an external place, this is not an EU place any more. The euro business should be managed on EU soil,” Weber said during a press conference in Strasbourg on Tuesday.
Weber, the leader of the largest group in the European Parliament, did not clarify whether he was referring specifically to euro clearing, which settles business and trade conducted in euros.
Along with the possible loss of passporting rights, the removal of Britain’s role as the centre of euro-clearing is an issue that has been worrying traders and brokers in London. The City’s major players are already preparing to shift parts of their operations away from London as they fear that a hard Brexit will result in the UK leaving Europe’s single market.
“I have the obvious interest that places like Amsterdam, like Paris, like Dublin, like Frankfurt, can win and others will lose. It will be not a positive thing for the City of London at the end,” said Weber, an ally of German Chancellor Angela Merkel.