Great Britain

'There WILL be a cost!' EU could shoot itself in foot by trying to punish UK for Brexit

The European Commission, the bloc’s Brussels-based executive, has sparked “peak uncertainty” across the Continent’s financial services sector. Executives fear a political push to demonstrate a cost to Brexit, the unresolved trade talks and a push to diminish the City of London’s grip on the market has caused most of the problems. David Schwimmer, chief executive of the London Stock Exchange Group, said: “This is the period of peak uncertainty.

“It looks like the EU will make sure there is a cost to Brexit, but it’s really important for global business to be able to participate in the biggest markets.

“Less fragmentation and more co-operation and continuity of service are in everyone’s interest."

The discussions about continued financial services co-operation are separate from the EU-UK trade talks.

The EU rejected including a comprehensive chapter on banking in the post-Brexit future relationship pact.

Brexit news Ursula von der Leyen

EU's bid to punish UK for Brexit is causing uncertainty for European bankers (Image: GETTY)

Ursula von der Leyen

Ursula von der Leyen is the EU Commission's president (Image: EbS)

And also the bloc has delayed decisions on so-called “equivalence”, which would confirm Britain’s standards as robust enough to continue UK-EU financial trades.

Sam Tyfield, a partner at London law firm Shoosmiths, said: “Some firms have plans in place already but there are many who think something will come along at the last minute.”

Shadow City minister Pat McFadden said: “What many in the City fear is the bad will created by crashing out without a deal.

“Deal or no deal, for them it is really a question of goodwill because they are depending on it for access to European markets.”

City of London

The City of London is Europe's premier financial services hub (Image: GETTY)

Brussels has repeatedly claimed it is difficult to assess UK standards because the Government aims to scrap EU rules after Brexit.

Chancellor Rishi Sunak announced earlier this month he would grant equivalence to the EU on financial services.

Some bankers have called on Britain to deliberately divergence away from EU standards in order to scrap the bloc’s red tape.

Ben Jackson, president of Intercontinental Exchange, said: “The reason we’ve invested in the UK for so long is that it’s the centre of global markets and the UK regulators have a deep understanding of the importance of frictionless access to them.

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Brexit new timeline

Things to watch at the Brexit trade talks go to the wire (Image: EXPRESS)

“There’s an opportunity for the UK to stand up and focus back on what made their market successful, namely principles-based regulation.”

Meanwhile, Ursula von der Leyen yesterday urged EU leaders to back a Brexit compromise with Boris Johnson – just as her chief negotiator Michel Barnier threatened to abandon talks.

The Commission president said the bloc had to be "creative" on the sticking points of fishing rights and common standards.

But Brussels sources said Mr Barnier told UK counterpart Lord Frost the EU team will travel to London for negotiations only if he felt a breakthrough could be made this weekend.

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Mr Barnier was said to be frustrated by "pointless" talks where Lord Frost EU refused demands.

An EU source said: "The British are frankly laughing at us; time is very short. If nothing moves in London we risk going towards no deal."

PM Mr Johnson told the Commons the EU was refusing to accept the UK's status as an independent coastal state, adding: "Our position on fish hasn't changed. We'll only be able to make progress if the EU accepts the reality that we must be able to control access to our waters and it's very important at this stage to emphasise that."

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