David Cameron says Brexit referendum ‘thought through’
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The UK capital was ousted by Amsterdam as the largest share trading hub in Europe. But Frank Eich, the former adviser to the Bank of England, said London should not be written off. He said no other financial centre offers the same “breadth and depth of specialist knowledge and skills”.
Mr Eich said: “Despite Brexit, London remains one of the most important global financial centres.”
He said while the British capital lacks the large US market, London is “more diverse” and more “intentionally focussed”.
Writing for Germany’s RedaktionsNetzwerk Deutschland, Mr Eich continued: “In return, London is probably more diverse – for example, a leader in the Islamic financial world – and more intentionally focussed.”
Prime Minister Boris Johnson signed a Brexit trade deal with the EU back in December, days before the end of the transition period.
Since January 1, the UK is no longer part of the EU single market and the bloc is facing increasing pressure to handle specialised financial services previously provided in London.
Due to Brexit, some institutes have move employees from London to EU cities including Paris, Dublin and Frankfurt.
London and Brussels aim to agree on the mutual recognition of standards this month.
Mr Eich continued: “Since European investors were no longer able to trade shares on the London Stock Exchange without a financial services agreement between Great Britain and the EU, trading activities had to be relocated to an EU Member State.”
The financial expert – who now works for the management consultancy firm Economicsense – said a financial market offers more than just “trading stocks”.
He added: “However, a financial market offers more than just trading stocks on an electronic platform.”
In January, UK businesses that export to the EU were told to set up separate firms inside the bloc to avert extra charges, paperwork and taxes.
A spokesperson for the Department for International Trade (DIT) said: “This is not government policy, the Cabinet Office have issued clear guidance.
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“We are ensuring all officials are properly conveying this information.”
Almost 1,500 EU-based financial services firms have applied for permission to operate in the UK, with around 1,000 of these planning to establish their first office in the country, according to a Freedom of Information request (FOI) by financial regulatory consultancy Bovill.
The FOI request from last year showed 1,441 firms had applied to the Temporary Permission Regime (TPR), with 83 percent of these on a services passport, meaning they would need to set up an office in the UK for the first time.
Earlier this month, the Bank of England warned the EU that their demands are excessive compared to international standards.
Brussels is keen to expand its financial services sector but appears fearful of the City slashing red tape as it could potentially further London’s already-dominant position.
The bloc is currently banning its financial institutions from trading in the square mile, while a deal is thrashed out.
Foreign Secretary Dominic Raab laughed off claims the EU will try to overtake Britain as the world’s leading financial centre.
Speaking to the BBC’s Andrew Marr, he ridiculed suggestions that the EU threatened “one of Britain’s great industries” and warned that such a move could eventually backfire against the bloc.
Additional reporting by Monika Pallenberg.
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