Negotiations between rivals; May vs. Macron
Despite the French President’s upbeat appearance with smiley photos during his visit to London this week, his remarks provoked more questions on the future of ongoing Brexit negotiations with EU leaders. It is clear that both France and Germany would like to cash in on the cloud of uncertainty engulfing the Brexit negotiations as both aim to boost their own financial centers at a time when many businesses are considering moving their European operations from the U.K. to elsewhere in Europe.
In response to the question as to why the EU suggested the U.K.'s dominant financial services sector would not be included in a post-Brexit trade deal, Emmanuel Macron said his aim is to preserve the single market.
'I'm here neither to punish nor to reward,” Macron was quoted by Sky News as saying.
'So, the choice is on the British side, not on my side. There can be no differentiated access to the financial services. If you want access to the single market, including financial services, be my guest. But it means you need to contribute to the budget and acknowledge the European jurisdiction,” he said, citing Norway as an example.
His remarks are seen as a reflection of France’s attitude during the Brexit negotiations. Despite the positive public relations on the Brexit negotiations, there are still many complex aspects to be discussed, particularly when it comes to financial services.
On the other hand, the U.K. Prime Minister’s remarks on the future of the City of London seems like “wishful thinking”, as no concrete steps have yet been taken.
'The City of London will continue to be a major global financial center,' May said on Thursday.
'That is an advantage not just for the U.K., it's actually good for Europe and good for the global financial system,' she added.
However, we still have not heard how London will remain as the global financial center while Frankfurt and Paris are pushing to attract more businesses escaping from Brexit uncertainty. Given that after Macron’s election victory on May 28 last year, a Financial Times story reported that French officials held talks with at least 20 large financial companies to lure them to Paris, it is easy to understand his tough stance in talks during his visit.
“U.S. banks, including Bank of America, Citigroup and Morgan Stanley are among the groups being urged to choose Paris over rival European financial centers,” according to officials briefed on the discussions.
Bearing this in mind, it is clear that it will not be up to the U.K. to reach a trade deal with the EU regarding financial services. However, another option could well be to remain in the single market but leave the EU. May has already ruled this option out but depending on how negotiations progress, this could well be back on the table to preserve access to the U.K.’s financial services throughout Europe.