One of the eurozone’s most senior financial policymakers has said that bloc must take a strict line with Britain in its EU exit talks, saying that the City of London cannot be allowed full market access if it will not fully apply European rules.
“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,” Jeroen Dijsselbloem, the president of the Eurogroup, 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 and regulations,” he said.
“We cannot allow that to happen.”
Mr Dijsselbloem said that the only obvious way that Britain could safeguard market access for its financial services industry would be to adopt a “Norwegian model” – in other words full membership of the European Economic Area and compliance with EU single market rules.
This “of course doesn’t appeal to the British,” he said.
Mr Dijsselbloem’s tough stance echoes warnings yesterday from Mario Draghi, the president of the European Central Bank, that Brexit raised
“sovereignty” questions for the euro area – a reference to how far the
currency bloc should seek to repatriate certain types of core trading activities from London.
“We have to take a firm stand on this, there is no alternative,” the
Euroogroup president said.
Mr Dijsselbloem also echoed a prediction from Mr Draghi that the main economic burden of Brexit will fall on the UK, not Europe.
“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.”