We’re watching you! EU dredges up finance warning as Brexit fails to deliver blow to UK

Brexit: EU 'will look for a new financial centre' says McGuinness

Speaking to Euronews, European Commissioner Mairead McGuinness claimed the bloc will look to have more than one financial hub away from the UK in a bid to take back control from London once Britain will act as a fully independent third country. In an attempt to warn UK negotiators, she claimed Brussels is “watching to see where the pressure points are” in the Brexit trade negotiations before moving onto making a decision on financial services not covered by a potential agreement. 

She said: “It’s true to say that the city of London is a major financial centre, that will not change overnight.

“But I think there will be questions within the European Union around open strategic autonomy, about having a reliance on a very large financial centre in a third country.

“And while there will be no immediate change, I think in the medium to long term this will evolve.

“So there aren’t any sudden decisions.

“It would be interesting to see how the negotiations evolve around having an absolute deal. And I think if there was a trade agreement reached, it makes the politics and the relationship much easier as we look at more complicated issues.

“Because the financial services sector is not covered by the trade agreement and we are watching to see where the pressure points are.

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“But it does go back to this core and fundamental question on where Europe wants to have its central financial activities, and there are possibilities we may not need a single financial centre that we rely on.”

It comes as MPs were warned they could be recalled from the Christmas recess next week if a post-Brexit trade deal is secured with the EU, as Brussels chief Ursula von der Leyen said there is a “path” to an agreement.

Downing Street said that the House of Commons will break on Thursday but put parliamentarians on notice to return at haste in the event of a breakthrough in negotiations with as little as 48 hours notice.

“Parliament has long shown it can move at pace and the country would expect nothing less,” No 10 said.

Time is running out to secure a trade deal by the end of the transition period on December 31, with a failure to broker one meaning businesses will face punishing tariffs when dealing with the bloc.

European Commission President Ms von der Leyen raised hopes of a breakthrough, but conceded the route to an agreement is “very narrow” and resolution of the difficulties over fishing may prove impossible.

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But she indicated that progress has been made on measures to prevent either side unfairly competing with the other by cutting standards or using state subsidies.

Downing Street said that with time in “short supply”, all the legislation should be in place by Thursday for an exit without an EU trade deal, which it insists is “the most likely outcome” despite acknowledging there has been “some progress”.

A spokesman said that, subject to the approval of the House, the Commons would go into recess on Thursday “but with the knowledge that we will recall MPs and Peers to legislate for a deal if one is secured”.

“The process for recall will align with the process for finalising the legislation for a deal, if one is secured, and no time will be lost,” he added.

“We realise that this duty falls not just on MPs and Peers, but on the parliamentary staff that make Parliament function, to whom we are very grateful.”

Mrs von der Leyen had told MEPs that the next few days would be “decisive” and added there is a “path to an agreement now”, although it is “very narrow”.

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She said that progress in the “level playing field” could mean the EU being allowed to act “autonomously” in retaliation if the UK flouts subsidy rules.

There has also been agreement that Mr Johnson will not undercut existing common labour and environmental standards, she said.

But difficulties remain over what happens in the future if either side changes its rules.

Mr Johnson has said no prime minister could accept a situation where Brussels could automatically impose punitive measures if it changes its regulations and the UK fails to follow suit.

However, it is on fishing where the two sides remain furthest apart, Mrs von der Leyen said.

She said that “as things stand I cannot tell you whether there will be a deal or not”.

“On standards, we have agreed a strong mechanism of non-regression. That’s a big step forward,” she added.

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