A leaked report shows that the European Union will lose out if it offers a bad deal to the City of London, the Guardian revealed on Wednesday.
The European parliament’s committee on economic and monetary affairs concluded that UK-based financial services count for such a sizeable amount of Europe’s assets, it would be in the EU’s best interests to retain a strong working relationship. The news comes amidst fears that British banks will lose their passporting rights and be unable to operate across Europe, as the UK prepares to leave the EU.
The report shows that UK-based financial services account for 40 percent of Europe’s assets under management and 60 percent of its capital markets business.
“UK-based banks provide more than £1.1 trillion of loans to the other EU member states,” the Econ secretariat’s paper continues.
“If financial services companies choose to leave the UK as a result of Brexit, the consequences should be carefully evaluated.
“A badly designed final deal would damage both the UK and the other 27 EU member states.
“The exclusion of the main European financial centre from the internal market could have consequences in terms of jobs and growth in the EU. It is in the interest of EU 27 and the UK to have an open discussion on this point.”
The 26-page document, titled Impact of the UK withdrawal on Econ areas of competence, and dated 13 December, has been given considerable importance by those within the EU.
The leaked report comes just weeks after British Prime Minister Theresa May warned the EU that it stood more to gain from offering the UK a good deal, and that if a bad deal was on the table the UK would rather walk away and sever ties completely.
May was lambasted by the press for making such a strong statement, but Wednesday’s leaked paper may add some strength to her words.