UK & Europe – Brexit financial impact

Topics about the UK, EU and Europe. Article 50 (Brexit) formally triggered.

UK-EU

An impact of Brexit could be the loss of ” euro-denominated clearing” from London.


Guardian: Up to 100,000 UK jobs at risk as Merkel and Juncker ally warns on euro clearing

The future of an estimated 100,000 jobs has been plunged into doubt after a close political ally of the German chancellor, Angela Merkel, and president of the European commission, Jean-Claude Juncker, warned that a prized sector in the City of London must relocate to EU soil after Brexit.

Manfred Weber, the leader of the centre-right European people’s party – the largest political group in the European parliament, to which both the German chancellor and the commission president belong – told reporters that euro-denominated clearing could no longer be undertaken in the City when the UK leaves the EU.

“EU citizens decide on their own money,” Weber said during a press conference in Strasbourg on Tuesday. “When the UK is leaving the European Union it is not thinkable that at the end the whole euro business is managed in London. This is an external place, this is not an EU place any more. The euro business should be managed on EU soil.”

Such a development would be a huge blow to the British economy. Six months ago, the head of the London Stock Exchange, Xavier Rolet, said at least 100,000 positions could be lost if the City’s clearing houses lost their ability to process euro-denominated transactions.

Clearing houses are independent parties that sit between the two parties in a trade and are tasked with managing the risk if one side defaults on payment. London clears around three-quarters of all euro-denominated trades.

Brexit was always going to have some down sides for the UK.

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8 Comments

  1. Missy

     /  April 6, 2017

    Lots of nif naffy stuff has been in the media today regarding Brexit and the EU.

    This opinion piece, however, caught my attention, and has some very valid points.

    http://www.telegraph.co.uk/news/2017/04/05/anglo-american-intelligence-relationship-will-give-britain-edge/

    A bit of background:
    In her letter triggering Article 50, Theresa May alluded to the Security Relationship potentially being at risk if a good deal is not negotiated. Those opposed to Brexit, and the opposition in general, immediately slammed this as blackmail, and threatening Europe with not telling them about terrorists entering Europe.

    This opinion piece today points out that this was a smart move, the EU and Europe relies on Britain’s access to US intelligence via the Five Eyes, and that at present the EU receives more than it gives with regards to the intelligence and security relationship.

    The piece goes on to point out that, as leaked by Snowden, the US are known to spy on intra EU communications, and they can therefore provide valuable intelligence for Britain. The writer believes that both the NSA and GCHQ will be monitoring all communications within the EU during negotiations, and the NSA will almost definitely pass it on to the UK, which will work to the UK’s advantage. It was noted that Trump will be wanting to help the UK, partly due to his positivity about Brexit, but also the fact that he appears to genuinely like Theresa May – and dislike Angela Merkel. The writer also points out the EU will also be spying on the UK, however, they admit they are not as good at it as the US and UK.

    Theresa May and the negotiation team will be fools if they do not use this advantage during the next 2 years.

    Reply
  2. Missy

     /  April 6, 2017

    It was all on in the EU Parliament today – which incidentally is sitting in Strasbourg, which they do once a month.

    Highlights:

    Nigel Farage compared the EU to the Mafia by demanding an exit bill, when rebuked by the speaker he amended it to gangsters, apparently saying they were running a protection racket.

    Guy Verhofstadt, the EU Brexit negotiator, said that Brexit was nothing more than a Tory catfight that got out of hand, a loss of time, a waste of energy and a stupidity, it is that opinion that caused Brexit – a perception of the complete arrogance of the EU.

    The EU voted in favour of the ‘red lines’ in the negotiation. These include:
    EU & UK citizens receive reciprocal treatment
    The final deal should not be a trade-off between trade and security
    The UK pay the costs linked to its withdrawal
    The European Banking Authority and European Medicines Agency should be moved out of London to a member state.

    I think the EU may underestimate May in this.

    Just on the ‘trade-off between trade and security’, no matter what the UK agree they can still withhold intelligence, first they have to get US permission to release any US intelligence, which means the US may refuse if the UK are no longer in the EU, but also there is a saying that says ‘you don’t know what you don’t know’ so the EU won’t know if intelligence is being withheld unless the UK tells them, though I personally favour the stronger line of telling the EU there will be a reduction in intelligence sharing – the EU cannot dictate to the UK what intelligence they share with the EU.

    Below are the EU’s negotiating principles:

    – The EU wishes to have the United Kingdom as a close partner in the future

    – Preserving the integrity of the Single Market means that the UK will not be able to participate on a sector by sector basis

    – The EU “four freedoms” are indivisible and there can be no cherry-picking

    – A non-member of the Union cannot have the same rights and benefits as a member

    – The EU will negotiate as a bloc, rather than 27 individual countries, so as not to undercut the position of the Union

    – Brexit negotiations will take place as a single package. They will only be considered settled when all individual items are agreed

    – The United Kingdom and European Union must agree on their future relationship, but these discussions can only take place when there is sufficient clarity on the process of the UK’s withdrawal from the Union

    – The Union is open to a transitional membership agreement, but this must be very clearly defined and time-limited

    – Negotiations must be completed by 29 March 2019

    Reply
    • The EU is a dead man walking in my view. The UK should play hard ball here and look to set the Germany industrial power bloc against the French and the weak south economies.

      Germany needs the UK as an export market… and germany is changing. I perceive a slow re-emergence of Germany national pride and less willingness to let france have its way because of guilt over “the War”…

      Add in the UK’s privileged security/intelligence relationship with the US and they have a very strong hand for negotiations

      Reply
      • Missy

         /  April 6, 2017

        Totally agree.

        I think much of the bluster and rhetoric from the EU is because they know this could mean the end of the EU as it is now, but I believe it could continue for some time yet in one format or antoher.

        There is increasing anti EU sentiment across Europe – even in countries that benefit greatly from the EU from the former Eastern Block, and rising nationalism in response to the EU’s expansionist and federalist agenda.

        The UK Government really do need to play hard ball, and hopefully Theresa May is the one to do it, Cameron showed last year he gave in to easily to the EU’s bullying, but I think TM will have more backbone. Intelligence is probably one of their biggest Ace’s that the UK have, and despite the Remain campaign saying that Intelligence would be affected, the actual collection and dissemination won’t – the UK is part of the most prolific intelligence group in the world (despite only being 5 countries), and the most sophisticated, they have the edge over the EU on that.

        Just on hTM, despite the fact she nominally supported Remain during the referendum, many believe that she is a Eurosceptic, so is a good person to take the UK through Brexit.

        Reply
  3. Pete Kane

     /  April 6, 2017

    You jusr ‘gotta’ love this guy.
    “Nigel Farage To EU Parliament: Make Us An Offer Not A Ransom Note, EU “Gangsters” Owe UK Billions”
    http://www.realclearpolitics.com/video/2017/04/05/nigel_farage_to_eu_parliament_you_should_be_making_us_an_offer_eu_owes_uk_billions.html

    Reply
    • Missy

       /  April 6, 2017

      Yep, that’s when he called them the mafia – the Italians objected for some reason.

      He isn’t far off though, the EU are acting like a protection racket.

      Reply
  4. Pete Kane

     /  April 6, 2017

    Hope he comes to NZ sometime soon Mtssy (you could give him a call). That will be hilarious. Chaos. but hilarious.

    Reply
  1. UK & Europe – Brexit financial impact – NZ Conservative Coalition

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