Michael Barnier, EU’s chief negotiator has said he wants a special deal with Britain to allow the twenty-seven member states access to the City. This is the first sign that the EU could be softening their hard-line approach to Brexit.
The Guardian newspaper claims it has seen documents which show that the EU is uneasy about the costs of Brexit on the rest of Europe.
In a private meeting of MEPs, Barnier according to the meeting minutes, that, “Some very specific work has to be done in this area. There will be a special/specific relationship. There will need to be work outside of the negotiation box … in order to avoid financial instability.”
Losing the City could have Consequences for the EU
It is believed that Brussels policymakers are concerned about the consequences to the EU after Britain leaves it.
That said, a spokesman for the European commission said that the meeting minutes did not accurately convey what Barnier said in the meeting. A source present at the meeting, however, said that overall the minutes were “more or less” accurate.
If true, then the view of the EU matches the view of the Governor of the Back of England Mark Carney who said, “There are greater financial stability risks on the continent in the short term, for the transition, than there are for the UK”.
The EU relies heavily on the City for their financial needs. Their concern is that they will have serious problems if international banks could not gain easy access to European countries and corporations. He added, “If you rely on a jurisdiction [the UK] for three-quarters of your hedging activities, three-quarters of your foreign exchange activity, half your lending and half your securities transactions, you should think very carefully about the transition from where you are today to where the new equilibrium will be.”
Despite the strong rhetoric. it appears the EU is realising it might not have the advantage in the forthcoming Brexit negotiations.