London’s Lord Mayor Still Hopes for Last-Minute Brexit Reprieve

Years of stymied negotiations have led plenty of bankers to write off the U.K. finance industry’s chances of securing free access to the European Union. But the Lord Mayor of London said Monday he can still see a path to a last-minute breakthrough.

Entering the final month of the Brexit transition, Lord Mayor and former Merrill Lynch investment banker William Russell said in an interview with Bloomberg News that any progress in trade talks for truckers and fishing trawlers might still unlock separate discussions about whether their industry can continue to do business with clients in the EU.

“Let’s get a full agreement and that gives us confidence to go to the next stage for financial services,” said Russell. “An agreement could potentially help us get that equivalence.”

London’s Lord Mayor Still Hopes for Last-Minute Brexit Reprieve

The issue of financial-market access has been left out of negotiations for a free trade agreement to replace the U.K.’s EU membership rights from Dec. 31. Until these talks conclude, the finance industry sees little chance of Brussels policy makers going ahead with the separate process of equivalence, which would ease cross-border business -- a move their British counterparts have already made.

U.K. City Minister John Glen had a similar message for lawmakers on Monday. “Our preference has always been to have a full set of mutual decisions, but the EU have made it clear that in the short-to-medium term they’re not prepared to even make those assessments,” he said. “Obviously we hope that by the end of the transition period, given all the information that the EU has, that that is still possible to make those determinations.”

Big financial firms have had little choice but to activate contingency plans for a rupture in trading terms at the end of the year. London Stock Exchange Group Plc and Cboe Global Markets Inc. have opened units inside the bloc to handle a huge surge of trading volume from European firms that could be blocked from trading in London. Big banks like JPMorgan Chase & Co. and Goldman Sachs Group Inc., meanwhile, are planning to move hundreds of billions of pounds in assets to the EU alongside hundreds of jobs.

Russell, who is serving an extended two-year term as a spokesman for London finance due to the Covid-19 pandemic, said supporting the sector should have been a bigger priority during Brexit talks. “There is a sense of frustration, no doubt about it,” he said. “It is disappointing” for a sector that generates about 7% of Britain’s economic output, he added. “You would expect a bit more love, maybe, to the City.”

Even so, in ten years’ time both Brexit and Covid-19 will have become “blips,” according to Russell. After all, he said, the City reinvented itself after the Great Fire of London in 1666 and the Big Bang deregulation of finance in the 1980s, and is now growing into areas such as green finance and fintech.

©2020 Bloomberg L.P.

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