Brussels caves: France admits EU will give in over City of London standoff

Dominic Raab dismisses EU threat to City of London

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Clement Beaune, a close ally of French President Emmanuel Macron, said the European Union may finally grant so-called equivalence to Britain’s bankers and fund managers. The move would allow them to do financial services business across the Continent. French Europe minister Clement Beaune told Bloomberg: “There will probably be partial equivalence.

“Probably by the end of the semester.”

Mr Beaune said the arrangements would likely be in place within the next four months.

But he warned City bankers would not be afforded the same level as access to the bloc that they enjoyed before Brexit.

“The access will be revocable, provisional, unilateral on the part of the EU,” he said.

“So it is not the same legal framework at all.”

His intervention, however, comes as a softening of rhetoric by Brussels after months of refusing to grant access for the City.

Under an equivalence arrangement, the European Commission would judge whether Britain’s financial services regulations are as robust as the bloc’s.

Eurocrats are able to withdraw any access granted under the scheme with as little as 30 days’ notice.

Michel Barnier, the EU’s former Brexit negotiator, has previously warned the bloc won’t be rushed into granting equivalence.

And financial services commissioner Mairead McGuinness has said any decision is “not about restoring market access rights that the UK has lost”.

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Bank of England Governor Andrew Bailey has criticised the EU’s approach.

He said the bloc was planning a power grab using though new laws of “dubious legality” to steal business from the City.

Mr Bailey also warned that Brussels could seize part of the UK’s highly profitable derivatives clearing market.

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But City lawyers have claimed eurocrats will struggle to come up with a way to pinch banks from London.

Michael McKee, head of financial services regulation for DLA Piper, said: “As Mr Bailey says, this would not typically be regarded as a proper approach legally.

“Legally this is business done ‘in the UK’ and so for the EU to shift this business they would typically either have to prohibit European banks and corporates from doing this business with London or threaten some sort of sanctions against them.”

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