London banks bring battle against Brexit to Europe

Banks with large London operations say they will step up lobbying European officials because they are running out of arguments to convince the British government the industry needs single market access after Britain leaves the European Union.

Banks have focused on pressuring British officials to push for as much market access as possible since voters decided seven months ago to leave the EU. They held fewer meetings with European officials, according to several senior sources in the financial services industry.

The focus is shifting because after scores of meetings and research reports, banks, which say they may begin moving staff and operations out of London in the next few months if there is no clarity, feel they are running out of new points to make.

British prime minister Theresa May said on Sunday she was not interested in Britain keeping "bits" of its EU membership, interpreted by some as signalling she will favour immigration controls over access to the single market.

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Key groups

Banks are now planning a new round of lobbying to highlight how a hard Brexit could harm the EU and the UK. They have identified French politicians, EU regulators and government officials, as key groups to win over.

“The battle for Britain is over, the battle for France is about to begin,” said one senior lobbyist.

Another senior lobbyist for one of the major global banks said he will spend more time in Brussels this year to target the EU's chief Brexit negotiator Michel Barnier and his teams as well as Didier Seeuws, a Belgian diplomat, who is helping co-ordinate the Brexit negotiations.

Britain’s position as Europe’s financial centre is emerging as one of the main collision points in the Brexit talks. Some European politicians see an opportunity to challenge British dominance of finance after decades of viewing its free-wheeling “Anglo-Saxon” model of capitalism with suspicion.

Lucrative business

EU leaders such as French president François Hollande have said they plan to weaken Britain’s grip on finance by, for instance, demanding the lucrative business of clearing euros should move to the euro zone.

Finance is Britain’s most important industry, accounting for about a 10th of its economic output and is its biggest source of business tax revenue.

But Britain also acts as "the investment banker for Europe", Bank of England governor Mark Carney said in November, with more than half the equity and debt raised for European governments and companies done in the UK.

Banks will argue that Europe depends on the strength and the depth of the financial sector in London to service its economy and companies. If access to the EU is cut off, regional financial stability could be in jeopardy, they will say.

One British government official, who asked not to be named, said regular dialogue with the finance sector will continue, but the number of meetings may reduce.

“The door is open if people want to talk to us. There is not an arbitrary point at which speaking to people is no longer helpful,” the person said. “But it has been intense, as we wanted it to be, and that intensity may ease.”

– Reuters