In an interview with the Guardian, Bundesbank boss, Jens Weidmann, warms that passporting rights to operate across EU will be lost if UK does not at least stay within the European Economic Area, a critical blow to London’s financial services industry.
Source: Hard Brexit will cost City of London its hub status, warns Bundesbank boss | World news | The Guardian
It looks like there will be a new battle between ‘Hard Brexit’ Vs. ‘Soft Brexit’, just a tough as the original referendum context.
Right-wing conservatives are starting to put pressure on the government in favor of a ‘Hard Brexit’.
Critically, it looks like a hard Brexit will be necessary to guarantee controls on immigration from the EU. BUT with a hard Brexit, the UK will be denied all the benefits of privileged market access to the EU.
Personally, I think that Weidmann’s warning is timely and appropriate.
We can expect the massive financial services industry lobby to start pressing the government for a soft Brexit. Very quickly we are likely to see major divisions in the Conservative Party once again. The critical factor is that Theresa May needs to protect her slim majority.
If I worked in the the Financial Services sector in London and had a big mortgage, I would be very getting worried about the downside risks following a hard Brexit. Top quality German courses in London should will see a boom. It reminds me of a British colleague from the automotive industry, he now lives in Southern Germany.
This doomsday scenario outlined in this latest post from Dr Alf is I think overstated and shows the lack of imagination in Mrs May’s Government.
The UK is the Global expert at offshore solutions, so what is required is a nearshoring solution that permits the City to remain as it is.
Most of the investment banks and City institutions already have offices in Europe and if they were to move offices to the Continent they would have to pay much higher wages, be subject to tougher employment legislation and endure higher Social Chapter costs.
Germany exports £27 billion GBP more to the UK than the UK sells to it, mostly in the form of luxury cars, engineered products, machine tools, car spare parts.
As a lifelong fan of German engineering and their Mittelstand I would want that to continue without disruption so in the last analysis “passporting rights ” for the City can be traded against this access for German goods but one would hope that doing so would not be necessary and that an sensible option found rather than having to play hardball by letting German luxury cars pile up at the dockside in Felixstowe, Tilbury and Hull.